摘要： Post-issue stock underperformance is driven, at least in part, by young issuers with contemporary decline in idiosyncratic risk (proxied by expected idiosyncratic volatility) exposure. We show that the SEO long-run underperformance primarily occurs in young issuers. The intuition is that young firms generally have greater uncertainty about their future profitability due to greater intangible growth options. Therefore, when young firms finance investment from SEO proceeds, this uncertainty could be resolved because growth options are converted into assets in place, leading to a larger reduction in idiosyncratic risk than their matched non-issuers suggest. Furthermore, there is no evidence of post-issue stock underperformance and abnormal decline in idiosyncratic risk for mature issuers, supporting the growth option perspectives. •SEO underperformance is driven by young issuers with decline in idiosyncratic risk.•Young firm exercises its growth option by investing SEO proceeds.•The exercise of growth options exhibits a decline in idiosyncratic risk. 出版者： Greenwich: Elsevier Inc 出版日期： 2014-11-01 出處： International review of economics & finance, 2014-11, Vol.34, p.246-266 資源來源： Elsevier ScienceDirect Journals 版權： 2014 Elsevier Inc. 版權： Copyright Elsevier Science Ltd. Nov 2014 識別號： ISSN: 1059-0560 識別號： EISSN: 1873-8036 識別號： DOI: 10.1016/j.iref.2014.08.009
