Accelerated Equity Offers and Firm Quality
Year: 2011
Type: article
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 pre-issue 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.
Source: European Financial Management
Authors: Don M. Autore, Irena Hutton, Tunde Kovacs
Institutions: Florida State University, Northeastern University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2766744112