Accelerated Equity Offers and Firm Quality

45 Pages Posted: 11 Sep 2008 Last revised: 5 Dec 2012

See all articles by Don M. Autore

Don M. Autore

Florida State University - College of Business

Irena Hutton

Florida State University - College of Business

Tunde Kovacs

University of Massachusetts Lowell

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2009

Abstract

A series of deregulatory reforms have promoted accelerated equity issuance at the expense of adequate time for underwriter and market scrutiny. Today the majority of publicly listed companies can raise equity on a moment’s notice, but many eligible issuers choose to allow additional time for scrutiny. We hypothesize that issuers with less favorable inside information (i.e. lower quality issuers) prefer to avoid the pre-issue scrutiny that could reveal their inside information and are therefore more likely to accelerate their offer. We find supportive evidence using measures of stock valuation and earnings quality as proxies for firm quality. The results suggest that investors are slow to capitalize the information embedded in the speed of issuance.

Keywords: Due diligence, seasoned equity offer, underwriter certification, firm quality, shelf registration, accelerated offer

JEL Classification: G14, G24, G32

Suggested Citation

Autore, Don M. and Hutton, Irena and Kovacs, Tunde, Accelerated Equity Offers and Firm Quality (December 1, 2009). Available at SSRN: https://ssrn.com/abstract=1265148 or http://dx.doi.org/10.2139/ssrn.1265148

Don M. Autore (Contact Author)

Florida State University - College of Business ( email )

821 ACADEMIC WAY, Room 314 RBA
P.O. Box 3061110
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Irena Hutton

Florida State University - College of Business ( email )

821 Academic Way
Tallahassee, FL 32306-1110
United States
850.645.1520 (Phone)

Tunde Kovacs

University of Massachusetts Lowell ( email )

1 University Ave
Lowell, MA 01854
United States

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