Institutional Ownership and the Rise of Shelf Offerings in U.S. Equity Raisings

59 Pages Posted: 10 Mar 2010 Last revised: 19 Sep 2012

See all articles by Sigitas Karpavicius

Sigitas Karpavicius

The University of Adelaide

Jo-Ann Suchard

UNSW Business School; Financial Research Network (FIRN)

Date Written: June 6, 2012

Abstract

Shelf offerings have become the dominant method of issuing seasoned equity over the last decade. We find that the increased institutional ownership of U.S. public firms and in particular shelf issuers is the key determinant in the shift in SEO issue method over time. The increase in institutional ownership provides additional monitoring and mitigates the under-certification problem induced by shelf offerings and lowers issue costs. Firms with higher institutional ownership have a more elastic demand curve and there is less need for underwriters to build demand through marketing.

Keywords: Shelf registration, Seasoned equity offering, Institutional ownership, Earnings management, Asymmetric information

JEL Classification: D82, G14, G24, G32

Suggested Citation

Karpavicius, Sigitas and Suchard, Jo-Ann, Institutional Ownership and the Rise of Shelf Offerings in U.S. Equity Raisings (June 6, 2012). Available at SSRN: https://ssrn.com/abstract=1566730 or http://dx.doi.org/10.2139/ssrn.1566730

Sigitas Karpavicius (Contact Author)

The University of Adelaide ( email )

Adelaide Business School
Level 12, 10 Pulteney Street
Adelaide, SA 5005
Australia
+61 8 8313 8007 (Phone)

Jo-Ann Suchard

UNSW Business School ( email )

high street
High St
sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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