Asymmetric Information, Disclosures of R&D and the Choice of Equity-Selling Mechanisms
Year: 2014
Type: preprint
Abstract: This study examines the impact of information asymmetry and corporate management monitoring on the choice among different mechanisms for selling equity. More specifically, I study the link between R&D disclosures and other measures of information asymmetry, in addition to ownership measures and firms’ choices among various types of rights offerings and private placements. Using a hand-collected sample of mandatory and non-discretionary R&D disclosures from publicly listed biotechnology firms, I find that firms tend to issue equity publicly rather than privately following credible R&D disclosures, i.e., when information asymmetry is low. By contrast, I find no support for the monitoring hypothesis. A detailed analysis by investor type confirms that monitoring does not seem to be an important determinant in the choice between private and public financing.
Source: SSRN Electronic Journal
Author: Hans Jeppsson
Institution: University of Gothenburg
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3171907142