Accelerated Equity Offers and Firm Quality

25 Pages Posted: 19 Oct 2011

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: 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 preÔÇÉissue 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

Autore, Don M. and Hutton, Irena and Kovacs, Tunde, Accelerated Equity Offers and Firm Quality (November 2011). European Financial Management, Vol. 17, Issue 5, pp. 835-859, 2011, Available at SSRN: https://ssrn.com/abstract=1946102 or http://dx.doi.org/10.1111/j.1468-036X.2011.00597.x

Don M. Autore (Contact Author)

Florida State University - College of Business ( email )

821 ACADEMIC WAY, Room 314 RBA
P.O. Box 3061110
Tallahassee, FL 32306-1110
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850-644-7857 (Phone)

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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