Shelf Versus Traditional Seasoned Equity Offerings: The Impact of Potential Short Selling

54 Pages Posted: 28 Nov 2017 Last revised: 22 Jan 2018

See all articles by Marie Dutordoir

Marie Dutordoir

University of Manchester - Manchester Business School

Norman C. Strong

University of Manchester - Alliance Manchester Business School

Ping Sun

University of Liverpool - Management School (ULMS)

Date Written: January 22, 2018

Abstract

Traditional SEOs elicit short selling from traders trying to increase offering discounts. Such short selling is more difficult for shelf offerings, as the time between their announcement and issuance tends to be shorter. We predict and find that firms with higher short-selling potential (SSP) are more likely to choose shelf over traditional SEOs. This result is robust to alternative proxies for SSP and other sensitivity tests. Further analysis suggests that shelf issuers aim to mitigate the threat of manipulative short selling. Our findings add to a growing literature showing that short selling has a real impact on corporate finance decisions.

Keywords: Seasoned equity offerings, short-selling, shelf v. traditional offerings

JEL Classification: G12, G14, G24, G32

Suggested Citation

Dutordoir, Marie and Strong, Norman Charles and Sun, Ping, Shelf Versus Traditional Seasoned Equity Offerings: The Impact of Potential Short Selling (January 22, 2018). Available at SSRN: https://ssrn.com/abstract=3076729 or http://dx.doi.org/10.2139/ssrn.3076729

Marie Dutordoir

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Norman Charles Strong (Contact Author)

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Ping Sun

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
90
Abstract Views
427
rank
286,098
PlumX Metrics