Seasoned equity offerings: Quality of accounting information and expected flotation costs

• 成果类型: Article
• 署名作者: Lee, Gemma; Masulis, Ronald W.
• 署名单位: Vanderbilt University; Seton Hall University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.04.010
• 发表日期: 2009
• 页码: 443-469
• 关键词: Seasoned equity offering; SEO; Stock offer; Stock issue; asymmetric information; Accounting information; Accruals quality; Dechow and Dichev model; Offer size; Flotation costs; Announcement effect; Underwriting fees; Gross spread; Withdrawn offers; Cancelled SEOs

摘要

Flotation costs represent a significant loss of capital to firms and are positively related to information asymmetry between managers and outside investors. We measure a firm's information asymmetry by its accounting information quality based on two extensions of the Dechow and Dichev [2002. The quality of accruals and earnings: the role of accrual estimation errors. Accounting Review 77, 35-59] earnings accruals model, which is a more direct approach to assessing the information available to outside investors than the more commonly used proxies. Our main hypothesis is that poor accounting information quality raises uncertainty about a firm's financial condition for outside investors, though not necessarily for insiders. This accounting effect lowers demand for a firm's new equity, thereby raising underwriting costs and risk. Using a large sample of seasoned equity offerings (SEOs), we show that poor accounting information quality is associated with higher flotation costs in terms of larger underwriting fees, larger negative SEO announcement effects, and a higher probability of SEO withdrawals. These results are robust to joint determination of offer size and flotation cost components and to adjustments for sample selection bias. (C) 2009 published by Elsevier B.V.