The Shelf Registration of Debt and Self Selection Bias

Authors

  • DAVID S. ALLEN,

  • ROBERT E. LAMY,

  • G. RODNEY THOMPSON

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    • Allen is from the College of Business Administration, Northern Arizona University. Lamy and Thompson are from the R. B. Pamplin College of Business, Virgina Polytechnic Institute and State University. Part of this research was completed while Lamy was at Tulane University. The authors would like to thank Paul Bolster, Don Chance, Bob Bruner, Ileen Malitz, Rob Hansen, and the anonymous referee for comments on earlier versions of this paper. Licia Heffernan provided valuable statistical assistance in the preparation of this paper.


ABSTRACT

Prior studies report lower issue costs for shelf registered debt and conclude that the benefits of increased underwriter competition can be realized by those firms using this registration procedure. This study re-examines the purported superiority of issuing debt via shelf registration, and finds that the savings in issue costs displayed by earlier studies can be attributed to a self selection bias and not the method of registration.

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