Handbook of Corporate Finance Empirical Corporate Finance Volume 1

Chapter 6

SECURITY OFFERINGS*

B. ESPEN ECKBO
Tuck School of Business, Dartmouth College, Hanover, NH 03755, USA
e-mail:[email protected]

RONALD W. MASULIS
Owen Graduate School of Management, Vanderbilt University, 401 21st Avenue South, Nashville,
TN 37203, USA
e-mail:[email protected]

ØYVIND NORLI
Norwegian School of Management BI, Nydalsveien 37, N-0442 Oslo, Norway
e-mail:[email protected]

Contents

Abstract 235
Keywords 235

1. Introduction 236


2. The security offering process 238
   2.1. U.S. securities regulations 239
   2.2. Alternative flotation methods 243
   2.2.1. The firm commitment underwriting process 243
   2.2.2. Other major flotation methods 249
   2.3. Aggregate issuance activity, U.S. 1980–2003 251
   2.3.1. Offering frequencies and cash proceeds 251
   2.3.2. Time from IPO to follow-on offerings 255


3. Flotation costs 261
   3.1. Total flotation costs 262
   3.2. Underwriter compensation 265
   3.3. Underpricing of SEOs 272
   3.4. Dependence between underpricing and underwriter spreads 279
   3.5. Offering delays and withdrawals 282
   3.6. Underwriter competition 282

*We thank Robert S. Hansen, Jay Ritter and Xueping Wu for suggestions.

Handbook of Corporate Finance, Volume 1
Edited by B. Espen Eckbo
Copyright©2007 Elsevier B.V. All rights reserved
DOI: 10.1016/S1873-1503(06)01006-3