Does Rule 10b-21 increase SEO discounting?

Don M. Autore

Journal of Financial Intermediation, 2011, vol. 20, issue 2, 231-247

Abstract: Short sale constraints prior to seasoned equity offers, imposed by Rule 10b-21 in 1988, are believed to compromise pricing efficiency and contribute to the large temporal increase in offer price discounting. This study provides additional insights by examining shelf-registered offers, which were exempt from pre-issue short sale constraints until 2004. The results suggest that pre-issue short sale constraints do not influence the level of discounting in seasoned equity offers. Moreover, this study reports that the recent temporal increase in discounting is due to a greater prevalence of overnight shelf offers, which are associated with relatively large offer price discounts.

Keywords: Seasoned; equity; offer; Discounting; Short; sale; constraints; Shelf; registration (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:20:y:2011:i:2:p:231-247

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