|Issue discount: %
difference between the SEO offering price and the closing price on the day
before the offering.
|To test this
hypothesis the authors run regressions of SEO issue discounts on various firm
and offering characteristics and include measures of short selling intensity
prior to the issue date—the explanatory variables are designed to capture
various characteristics of the firm or offering that are known to capture
discount rate. These regression are similar to Corwin’s 2003 work.