Shelf Registrations and Shareholder Wealth: A Comparison of Shelf and Traditional Equity Offerings

Authors

  • NORMAN H. MOORE,

  • DAVID R. PETERSON,

  • PAMELA P. PETERSON

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    • Doctoral student, Florida State University, and Assistant Professors, Florida State University, respectively. The authors would like to thank the referee and associate editor for helpful comments and suggestions. The authors would also like to thank the Center for Banking and Financial Institutions at Florida State University for providing assistance in data collection.

ABSTRACT

This study examines the effect of issuing common stock on shareholder wealth under two alternative methods of registration, shelf registration under the Securities and Exchange Commission's Rule 415 and the traditional method of registering shares for immediate sale. The stock price reactions accompanying security registrations and offerings over the period from March 1982 through November 1983 are examined for over two hundred issues. A negative price reaction is observed for traditional and shelf registrations for both utility and non-utility issuers. No statistically significant difference is observed between shelf and traditional registrations. Further negative price reactions precede the offerings of these securities.

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