Institutional Ownership and the Rise of Shelf Offerings in U.S. Equity Raisings
59 Pages Posted: 10 Mar 2010 Last revised: 19 Sep 2012
Date Written: June 6, 2012
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: Suggested Citation