This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during quot;hot issuequot; periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non venture capital...

This paper examines the effects of improvement in creditors' rights protection on firms' financing choices and securities issuance. To address these issues, I exploit exogenous variation in creditors' rights protection induced by the staggered adoption of anti-recharacterization laws by some...

Firms have different choices of using equity issuance and cash flow to save. Empirically, we find three differences between savings from equity issuance and cash flow. First, firms may not increase or decrease the savings rates of equity issuance and cash flow at the same time. Second, the...

IPO firms with high-powered CEO incentive contracts have lower failure rates in the aftermarket. Economically, an interquartile change in the distribution of CEO pay translates in a reduction of the failure risk probability by approximately 21%. The Pay Gap between the CEO and its subordinate...

During IPO bookbuilding, issuers revise both the offer price and the number of shares (or equivalently, insider retention). These two percentage revisions are of comparable magnitude and are nearly uncorrelated. We show theoretically that revision to offer price and to retention capture...

We empirically examine theories of secured debt. Credit risk and asset volatility increase with secured debt issuance, and the strength of this association is unrelated to contemporaneous investment. Hand-collected data reveals most secured debt is secured on all assets of the firm and rarely...

Assuming benevolent managers, the debt-overhang problem suggests that distressed firms generally refrain from issuing equity. In contrast, agency theory predicts that distressed firm managers have strong self-interests to finance even deteriorating projects through equity issuance. This paper...

This paper uses market-to-book ratio decomposition to examine whether firms that issue equity through initial public offerings or seasoned equity offerings exploit mispricing because of investor enthusiasm or to finance growth opportunities. We find strong evidence that, on average, firms do not...

This research considers the strategies on the initial public offering of company equity at the stock exchanges in the imperfect highly volatile global capital markets with the nonlinearities. We provide the IPO definition and compare the initial listing requirements on the various markets. We...

Using a sample of firms that conducted multiple SEOs during 1995-2012, we examine whether firms can build credibility for subsequent SEOs by following through on their stated use of proceeds from earlier SEOs. We find that firms that previously state their intention to invest funds in projects...