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Financial Flexibility and At‐the‐Market (ATM) Equity Offerings: Evidence from Real Estate Investment Trusts

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  • David Hartzell
  • Shawn D. Howton
  • Shelly Howton
  • Benjamin Scheick

Abstract

This article examines at‐the‐market (ATM) equity programs as an additional source of financial flexibility. We find that firms with higher market‐to‐book ratios and greater institutional ownership are more likely to announce an ATM program. Firms using ATM programs are also more likely to issue shares when they have exhausted other viable financing alternatives, have timely investment opportunities and when market conditions are favorable. Finally, we document a significant negative announcement effect around the establishment of an ATM program, though the magnitude of this effect is significantly less negative than that of a comparable SEO.

Suggested Citation

  • David Hartzell & Shawn D. Howton & Shelly Howton & Benjamin Scheick, 2019. "Financial Flexibility and At‐the‐Market (ATM) Equity Offerings: Evidence from Real Estate Investment Trusts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 47(2), pages 595-636, June.
    • Handle: RePEc:bla:reesec:v:47:y:2019:i:2:p:595-636
    DOI: 10.1111/1540-6229.12131
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    Cited by:

    1. Daniel Broxterman & Tingyu Zhou, 2023. "Information Frictions in Real Estate Markets: Recent Evidence and Issues," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 203-298, February.
    2. George D. Cashman & David M. Harrison & Shelly Howton & Benjamin Scheick, 2023. "The Cost of Financial Flexibility: Information Opacity, Agency Conflicts and REIT at-the-Market (ATM) Equity Offerings," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 505-541, February.
    3. Mansley, Nick & Wang, Zilong & Weng, Xiaoyu & Zhang, Wenjing, 2023. "Good growth, bad growth: Market reaction to capital raising for REIT expansion," International Review of Financial Analysis, Elsevier, vol. 86(C).

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