The effects of removing barriers to equity issuance

Matthew T. Gustafson and Peter Iliev

Journal of Financial Economics, 2017, vol. 124, issue 3, 580-598

Abstract: We study the consequences of a US deregulation allowing small firms to accelerate their public equity issuance. Post-deregulation, affected firms double their reliance on public equity and transition away from private investments in public equity compared to similar untreated firms. The net effect is a 5.7 percentage point or 49% increase in the annual probability of raising equity. This is accompanied by a reduction in equity issuance costs, an increase in investment, and a decrease in leverage. Our findings provide evidence that reducing equity issuance barriers benefits issuers even in highly developed markets.

Keywords: Seasoned equity offerings; PIPEs; Follow-on offering; SEO Issuance costs; Shelf registrations (search for similar items in EconPapers)
JEL-codes: G18 G32 G38 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:124:y:2017:i:3:p:580-598

DOI: 10.1016/j.jfineco.2017.03.008

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