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THE COSTS OF EQUITY ISSUES SINCE RULE 415: A CLOSER LOOK
Author(s) -
Denis David J.
Publication year - 1993
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1993.tb00129.x
Subject(s) - underwriting , equity (law) , business , off the shelf , finance , economics , monetary economics , actuarial science , computer science , software engineering , political science , law
In this paper I re‐examine the effect of shelf registration (SEC Rule 415) on the underwriter fees of firms issuing equity. The data indicate that lower fees cannot be obtained by typical firms using the shelf procedure. Rather, previously documented evidence of lower underwriter spreads for shelf issues appears to be due to a selection bias in the firms choosing shelf registration. These firms enjoy a comparative cost advantage over other firms regardless of the registration procedure used.