The Effects of Removing Barriers to Equity Issuance
49 Pages Posted: 15 Jan 2015 Last revised: 23 Jul 2016
Date Written: July 2016
We study the consequences of a U.S. deregulation allowing small firms to accelerate their public equity issuance. Post-deregulation, affected firms double their reliance on public equity and transition away from private investments in public equity compared to similar untreated firms. The net effect is a 5.7 percentage point or 49% increase in the annual probability of raising equity. This is accompanied by a reduction in equity issuance costs, an increase in investment, and a decrease in leverage. Our findings provide evidence that reducing equity issuance barriers benefits issuers even in highly developed markets.
Keywords: Seasoned Equity Offerings, PIPEs, Accelerated SEO, Issuance Costs, Shelf Registrations
JEL Classification: G32, G18
Suggested Citation: Suggested Citation