Expected discounting in seasoned equity offers is a cost of uncertainty about firm value, marketing new shares, and acquiring information that raises the offer price. Stockholders incorporate predictable discounting in stock prices when equity offers are first announced. The surprise component of discounting, reflecting the lead bank's final adjustment to the offer price, releases information that often causes economically large price swings on the offer day. Disparities between the issuer's closing price and the price suggested in the lead bank's final order book are a primary source of information. The discount surprise appears to be used by lead banks to update capital suppliers with that eleventh-hour information before they commit their funds.

This paper examines post-revision return drift, or PRD, following analysts’ revisions of their stock recommendations. PRD refers to the finding that the analysts’ recommendation changes predict future long-term returns in the same direction as the change (i.e., upgrades are followed by positive returns, and downgrades are followed by negative returns). During the high-frequency algorithmic trading period of 2003–2010, average PRD is no longer significantly different from zero. The new findings agree with improved market efficiency after declines in real trading cost inefficiencies. They are consistent with a reduced information production role for analysts in the supercomputer era.