Managing the Costs of Issuing Common Equity: The Role of Registration Choice

39 Pages Posted: 19 Nov 2004

Date Written: June 26, 2006

Abstract

We examine how firms can manage the costs of issuing common equity through their choice of SEC registration strategy. Firms that use unallocated shelf, a deregulated registration procedure, pay lower underwriter fees and access the market faster than similar firms that use the slower traditional procedure that requires detailed advance disclosure. Low information-asymmetry firms that use shelf incur minimal asymmetric-information related price declines when registering and issuing equity. High information-asymmetry firms that choose shelf, however, experience large price declines, and instead tend to choose the traditional registration procedure.

Keywords: Shelf registration, seo, asymmetric information

JEL Classification: G30, G32, G38

Suggested Citation

Bethel, Jennifer and Krigman, Laurie, Managing the Costs of Issuing Common Equity: The Role of Registration Choice (June 26, 2006). Available at SSRN: https://ssrn.com/abstract=621162 or http://dx.doi.org/10.2139/ssrn.621162

Jennifer Bethel

Babson College ( email )

Babson Park, MA 02457-0310
United States
781-239-5797 (Phone)
781-239-5004 (Fax)

HOME PAGE: http://faculty.babson.edu/bethel/

Laurie Krigman (Contact Author)

Babson College ( email )

Finance Division
321 Tomasso Hall
Babson Park, MA 02457-0310
United States
781-239-4246 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
417
Abstract Views
2,189
rank
87,889
PlumX Metrics