Differences in the information environment prior to seasoned equity offerings under relaxed disclosure regulation

Sarah B. Clinton, Joshua White and Tracie Woidtke

Journal of Accounting and Economics, 2014, vol. 58, issue 1, 59-78

Abstract: The SEC promulgated the Securities Offering Reform (SOR) in 2005 to ease disclosure restrictions prior to seasoned equity offerings (SEOs). The SEC argued that SOR would improve the information environment, but critics claimed it would allow firms to hype their stock. This paper is the first to examine the information environment at the time of capital formation under SOR. We find more frequent and accurate management earnings forecasts, more 8-K filings, greater absolute market-adjusted returns, and more positive stock returns leading up to the SEO issue date indicating a richer pre-SEO information environment with capital formation benefits after SOR.

Keywords: Securities Offering Reform; Securities regulation; Seasoned equity offerings; Disclosure; Information environment; Shelf registration (search for similar items in EconPapers)
JEL-codes: G38 K2 M41 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:58:y:2014:i:1:p:59-78

DOI: 10.1016/j.jacceco.2014.05.002

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