Accelerated Equity Offers and Firm Quality
25 Pages Posted: 19 Oct 2011
There are 2 versions of this paper
Accelerated Equity Offers and Firm Quality
Date Written: November 2011
Abstract
A series of deregulatory reforms has 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 hypothesise that issuers with less favourable 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 capitalise the information embedded in the speed of issuance.
Keywords: seasoned equity offer, underwriter certification, firm quality, shelf registration, due diligence
JEL Classification: G14, G24, G32, G38
Suggested Citation: Suggested Citation
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Accelerated Equity Offers and Firm Quality
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