Accelerated Equity Offers: The Role of Internal and External Certification Mechanisms
39 Pages Posted: 4 Nov 2013 Last revised: 31 Jan 2014
Date Written: October 31, 2013
We examine the role of internal and external certification mechanisms in the issuance choice of SEOs between accelerated offers and fully marketed offers. Our empirical work supports the view that a firm’s internal corporate governance structure and audit fee are associated with the issuance choice between accelerated and fully marketed offers. Furthermore, we find that after controlling for the self-selection problem, firms paying higher audit fee incur lower flotation costs as measured by gross spreads. Finally, we find a significant positive association between audit fee and the net proceeds raised in SEOs.
Keywords: accelerated offers, seasoned equity, flotation costs, information asymmetry, due diligence
JEL Classification: G14, G24, G32
Suggested Citation: Suggested Citation