IDEAS home Printed from https://ideas.repec.org/a/ate/journl/ajbev4i1-3.html
   My bibliography  Save this article

Financial Impact of Canadian Bill 198 on Seasoned Equity Offerings by Canadian Firms

Author

Listed:
  • Arturo Rubalcava

Abstract

This study explores the financial impact of the Canadian Bill 198on seasoned equity offerings by Canadian firms –cross-listed in major U.S. stock exchanges and those listed in the Toronto Stock Exchange only (non-cross-listed). Canadian Bill 198, also called Canadian SOX, became effective in December 2005. It finds the market reaction to all offer announcements is not different between the period 1999-2005 (pre-Bill) and the period 2006-2011 (post-Bill). When distinguishing offers by cross-listed and matched non-cross-listed firms, the market reaction is also not significantly different between the pre- and the post-Bill periods, after conditioning for offer and firm characteristics. On the other hand, when distinguishing offers by underwriting method (marketed underwritten versus bought deals), the market reaction is less positive for marketed underwritten offers than bought deals for the post-Bill period only –mostly for noncross-listed firms. This may explain why marketed underwritten offers have decreased significantly as a choice for underwriting seasoned equity offerings in the last years.

Suggested Citation

  • Arturo Rubalcava, 2018. "Financial Impact of Canadian Bill 198 on Seasoned Equity Offerings by Canadian Firms," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 4(1), pages 43-68, January.
    • Handle: RePEc:ate:journl:ajbev4i1-3
    DOI: 10.30958/ajbe.4.1.3
    as

    Download full text from publisher

    File URL: https://www.athensjournals.gr/business/2018-4-1-3-Rubalcava.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.30958/ajbe.4.1.3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gunay, Erdal & Ursel, Nancy, 2015. "Underwriter competition in accelerated seasoned equity offerings: Evidence from Canada," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 34(C), pages 94-110.
    2. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    3. Ari Pandes, J., 2010. "Bought deals: The value of underwriter certification in seasoned equity offerings," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1576-1589, July.
    4. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    5. Easley, David, et al, 1996. "Liquidity, Information, and Infrequently Traded Stocks," Journal of Finance, American Finance Association, vol. 51(4), pages 1405-1436, September.
    6. Loderer, Claudio & Cooney, John W & van Drunen, Leonard D, 1991. "The Price Elasticity of Demand for Common Stock," Journal of Finance, American Finance Association, vol. 46(2), pages 621-651, June.
    7. Stephen R. Foerster & G. Andrew Karolyi, 1999. "The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the United States," Journal of Finance, American Finance Association, vol. 54(3), pages 981-1013, June.
    8. Jeon, Jin Q. & Ligon, James A., 2011. "The role of co-managers in reducing flotation costs: Evidence from seasoned equity offerings," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1041-1056, May.
    9. Kate Litvak, 2008. "The Long‐Term Effect of the Sarbanes‐Oxley Act on Cross‐Listing Premia," European Financial Management, European Financial Management Association, vol. 14(5), pages 875-920, November.
    10. Arturo Bris & Salvatore Cantale & George P. Nishiotis, 2007. "A Breakdown of the Valuation Effects of International Cross‐listing," European Financial Management, European Financial Management Association, vol. 13(3), pages 498-530, June.
    11. Atturo Rubalcava, 2015. "Impact of Sarbanes-Oxley Act on Seasoned Equity Offerings by Canadian Cross-Listed Firms: Evidence from Bought Deals vs. Firm Commitment," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(1), pages 63-71.
    12. Richard Bozec & Mohamed Dia & Yves Bozec, 2013. "Corporate ownership and governance practices in Canada: a longitudinal study," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 4(1), pages 51-73.
    13. Bernardo Bortolotti & William Megginson & Scott B. Smart, 2008. "The Rise of Accelerated Seasoned Equity Underwritings," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(3), pages 35-57, June.
    14. Litvak, Kate, 2007. "The effect of the Sarbanes-Oxley act on non-US companies cross-listed in the US," Journal of Corporate Finance, Elsevier, vol. 13(2-3), pages 195-228, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arturo Rubalcava, 2021. "Determinants Of Price Response To Canadian Bought Deals And Marketed Underwritten Equity Offers: Evidence Before And After The Canadian Sox," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 15(1), pages 19-32.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arturo Rubalcava, 2021. "Determinants Of Price Response To Canadian Bought Deals And Marketed Underwritten Equity Offers: Evidence Before And After The Canadian Sox," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 15(1), pages 19-32.
    2. Atturo Rubalcava, 2015. "Impact of Sarbanes-Oxley Act on Seasoned Equity Offerings by Canadian Cross-Listed Firms: Evidence from Bought Deals vs. Firm Commitment," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(1), pages 63-71.
    3. Koerniadi, Hardjo & Krishnamurti, Chandrasekhar & Lau, Sie Ting & Tourani-Rad, Alireza & Yang, Ting, 2015. "The role of internal and external certification mechanisms in seasoned equity offerings," Journal of Multinational Financial Management, Elsevier, vol. 30(C), pages 110-127.
    4. Dang, Man & Puwanenthiren, Premkanth & Truong, Cameron & Henry, Darren & Vo, Xuan Vinh, 2022. "Audit quality and seasoned equity offerings methods," International Review of Financial Analysis, Elsevier, vol. 83(C).
    5. Gao, Xiaohui & Ritter, Jay R., 2010. "The marketing of seasoned equity offerings," Journal of Financial Economics, Elsevier, vol. 97(1), pages 33-52, July.
    6. Massa, Massimo & Peyer, Urs & Tong, Zhenxu, 2005. "Limits of Arbitrage and Corporate Financial Policy," CEPR Discussion Papers 4829, C.E.P.R. Discussion Papers.
    7. Matthias Kiefer & Edward Jones & Andrew Adams, 2016. "Principals, Agents and Incomplete Contracts: Are Surrender of Control and Renegotiation the Solution?," CFI Discussion Papers 1603, Centre for Finance and Investment, Heriot Watt University.
    8. Jyh-Dean Hwang, 2013. "Are There Valuation and Operating Performance Gains from International Cross Listing? Evidence from Taiwan’s Depositary Receipt Issuers," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 3(2), pages 137-163, December.
    9. Schmukler,Sergio L. & Versperoni,Esteban, 2000. "Globalization and firms'financing choices - evidence from emerging economies," Policy Research Working Paper Series 2323, The World Bank.
    10. Jyh-Dean Hwang, 2013. "Are There Valuation and Operating Performance Gains from International Cross Listing? Evidence from Taiwan’s Depositary Receipt Issuers," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 3(2), pages 137-163, December.
    11. Moritzen, Mark Raun & Schandlbauer, Alexander, 2020. "The impact of competition and time-to-finance on corporate cash holdings," Journal of Corporate Finance, Elsevier, vol. 65(C).
    12. Michel A. Habib & Alexandre Ziegler, 2003. "Why Government Bonds Are Sold by Auction and Corporate Bonds by Posted-Price Selling," FAME Research Paper Series rp78, International Center for Financial Asset Management and Engineering.
    13. Bai, Jennie & Philippon, Thomas & Savov, Alexi, 2016. "Have financial markets become more informative?," Journal of Financial Economics, Elsevier, vol. 122(3), pages 625-654.
    14. Harvey, Campbell R. & Lins, Karl V. & Roper, Andrew H., 2004. "The effect of capital structure when expected agency costs are extreme," Journal of Financial Economics, Elsevier, vol. 74(1), pages 3-30, October.
    15. Blanco, Iván & García, Sergio J., 2021. "Options trading and the cost of debt," Journal of Corporate Finance, Elsevier, vol. 69(C).
    16. Bailey, Warren & Andrew Karolyi, G. & Salva, Carolina, 2006. "The economic consequences of increased disclosure: Evidence from international cross-listings," Journal of Financial Economics, Elsevier, vol. 81(1), pages 175-213, July.
    17. Holderness, Clifford G., 2018. "Equity issuances and agency costs: The telling story of shareholder approval around the world," Journal of Financial Economics, Elsevier, vol. 129(3), pages 415-439.
    18. Li, Xiafei & Luo, Di, 2019. "Financial constraints, stock liquidity, and stock returns," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 63(C).
    19. Itay Goldstein & Shijie Yang & Luo Zuo, 2020. "The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation," NBER Working Papers 27529, National Bureau of Economic Research, Inc.
    20. Errunza, Vihang R. & Miller, Darius P., 2003. "Valuation effects of seasoned global equity offerings," Journal of Banking & Finance, Elsevier, vol. 27(9), pages 1611-1623, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ate:journl:ajbev4i1-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Afrodete Papanikou (email available below). General contact details of provider: https://www.athensjournals.gr .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.