We thank the editor (John Doukas), an anonymous referee, Cathy Cao, John Easterwood, Olubunmi Faleye, Xiaohui Gao, Raman Kumar, Wei-Hsien Li, Ron Masulis, Bob Mooradian, Anand Venkateswaran, Chris Yung, and seminar participants at the 2008 Financial Management Association meeting, EFMA 2010 meeting, Northeastern University, and Virginia Tech for helpful comments.
Accelerated Equity Offers and Firm Quality
Version of Record online: 2 MAR 2011
© 2011 Blackwell Publishing Ltd
European Financial Management
Volume 17, Issue 5, pages 835–859, November 2011
How to Cite
Autore, D. M., Hutton, I. and Kovacs, T. (2011), Accelerated Equity Offers and Firm Quality. European Financial Management, 17: 835–859. doi: 10.1111/j.1468-036X.2011.00597.x
- Issue online: 18 OCT 2011
- Version of Record online: 2 MAR 2011
- seasoned equity offer;
- underwriter certification;
- firm quality;
- shelf registration;
- due diligence
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.