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The Costs Of Equity Issues Since Rule 415: A Closer Look

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  • David J. Denis

Abstract

In this paper I re‐examine the effect of shelf registration (SEC Rule 415) on the underwriter fees of firms issuing equity. The data indicate that lower fees cannot be obtained by typical firms using the shelf procedure. Rather, previously documented evidence of lower underwriter spreads for shelf issues appears to be due to a selection bias in the firms choosing shelf registration. These firms enjoy a comparative cost advantage over other firms regardless of the registration procedure used.

Suggested Citation

  • David J. Denis, 1993. "The Costs Of Equity Issues Since Rule 415: A Closer Look," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 16(1), pages 77-88, March.
    • Handle: RePEc:bla:jfnres:v:16:y:1993:i:1:p:77-88
    DOI: 10.1111/j.1475-6803.1993.tb00129.x
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    Cited by:

    1. Don M. Autore & Irena Hutton & Tunde Kovacs, 2011. "Accelerated Equity Offers and Firm Quality," European Financial Management, European Financial Management Association, vol. 17(5), pages 835-859, November.
    2. B[oslash]hren, [Oslash]yvind & Eckbo, B. Espen & Michalsen, Dag, 1997. "Why underwrite rights offerings? Some new evidence," Journal of Financial Economics, Elsevier, vol. 46(2), pages 223-261, November.
    3. Autore, Don M., 2011. "Does Rule 10b-21 increase SEO discounting?," Journal of Financial Intermediation, Elsevier, vol. 20(2), pages 231-247, April.
    4. 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.
    5. Cornett, Marcia Millon & Davidson, Wallace III & Rangan, Nanda, 1996. "Deregulation in investment banking: Industry concentration following Rule 415," Journal of Banking & Finance, Elsevier, vol. 20(1), pages 85-113, January.
    6. Autore, Don M. & Kumar, Raman & Shome, Dilip K., 2008. "The revival of shelf-registered corporate equity offerings," Journal of Corporate Finance, Elsevier, vol. 14(1), pages 32-50, February.
    7. Hao, (Grace) Qing, 2011. "Securities litigation, withdrawal risk and initial public offerings," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 438-456, June.
    8. Fukuyama, Hirofumi & Weber, William L., 1999. "The efficiency and productivity of Japanese securities firms, 1988-93," Japan and the World Economy, Elsevier, vol. 11(1), pages 115-133, January.
    9. Yeoman, John C., 2001. "The optimal spread and offering price for underwritten securities," Journal of Financial Economics, Elsevier, vol. 62(1), pages 169-198, October.
    10. 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.
    11. Zhaoxia Xu, 2007. "Do Firms Adjust Toward a Target Leverage Level?," Staff Working Papers 07-50, Bank of Canada.

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