The revival of shelf-registered corporate equity offerings |
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| Authors: | Don M. Autore Raman Kumar Dilip K. Shome |
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| Affiliation: | 1. UNSW Business School, Australia;2. Adelaide Business School, The University of Adelaide, Australia;1. Tulane University, United States;2. Michigan State University, United States;3. University of Alabama, United States;1. Department of Finance, Driehaus College of Business, DePaul University, 1 East Jackson Blvd., Chicago, IL 60604, United States;2. Department of Economics and Finance, Middle Tennessee State University, Business and Aerospace N329C, MTSU Box 27, Murfreesboro, TN 37132, United States;1. HEC Paris, France;2. Schulich School of Business, York University, Canada;3. Virginia Polytechnic Institute and State University, United States;1. American University of Beirut, Olayan School of Business, Bliss Street, P.O. Box: 11-0236, Beirut, Lebanon;2. McCombs School of Business, University of Texas, Austin, CBA 6.266, United States |
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| Abstract: | We report that traditional seasoned equity offerings (SEOs) are no longer firms' preferred choice for raising seasoned public equity. Traditional offerings have recently been surpassed by shelf-registered offerings in terms of both annual frequency and total capital raised. This represents a dramatic shift from the 1980s, during which the overwhelming majority of firms favored traditional over shelf-registered offerings. We find that the growth in shelf use is related to firms increasingly valuing and using the option feature of shelf registration to defer offerings. Moreover, the evidence indicates that the way firms now use shelf offerings resolves the shelf under-certification problem and results in no larger market penalties and significantly lower underwriter fees relative to non-shelf offerings. Finally, firms often use universal shelf filings and choose between debt and equity offerings based on the prevailing relative market conditions. |
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