The role of internal and external certification mechanisms in seasoned equity offerings

Koerniadi, Hardjo and Krishnamurti, Chandrasekhar and Lau, Sie Ting and Tourani-Rad, Alireza and Yang, Ting (2015) The role of internal and external certification mechanisms in seasoned equity offerings. Journal of Multinational Financial Management, 30. pp. 110-127. ISSN 1042-444X

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When conducting their seasoned equity offerings (SEOs), US firms have been increasingly relying on shelf offering or accelerated offering rather than non-shelf offering or traditional book building, the predominant issuance methods in the past. Previous studies find that the unpopularity of shelf or accelerated offering in the past is due to the under-certification problem. Therefore, the change in firms’ preferred issuance methods suggests that firms must have obtained adequate certification through various ways. In this paper, we study several potential internal and external certification mechanisms that issuers can utilize and explore their roles in the SEO process. We find that the internal certification via sound corporate governance affects firms’ choice of the issuance method between shelf (accelerated) and nonshelf (non-accelerated) offerings, while the external certification through acquiring high-quality auditing services impacts the issuance costs.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Accepted version deposited in accordance with the copyright policy of the publisher.
Faculty / Department / School: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 28 Apr 2016 04:28
Last Modified: 28 Jul 2016 04:38
Uncontrolled Keywords: shelf offering; accelerated offering; seasoned equity offering; flotation costs; corporate governance; due diligence
Fields of Research : 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150201 Finance
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
Identification Number or DOI: 10.1016/j.mulfin.2015.04.001

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