The Rule 415 experiment: equity markets

Article Abstract:

Firms are allowed by the Securities and Exchange Commission's(SEC's) Rule 415 to register all the securities they reasonably expect to sell over two years and to sell the securities at any time within those two years at the discretion of management. Whether equity offerings made under Rule 415, also called shelf offerings, differ in issuing costs from equity offerings not sold under the rule is examined. It is found that shelf offerings cost 13 percent less for syndicated issues and 51 percent less for non-syndicated issues, and an investigation of the empirical relevance of the market overhang argument suggests that shelf registrations depress the price of the registering firm's shares more than traditional registrations, although the market overhang argument is not supported.

Regulation misc. commercial sectors, Laws, regulations and rules, Corporations, Financial institutions, Securities law, United States. Securities and Exchange Commission, Legislation, Legislative process

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The pricing effects of interfirm cash tender offers

Article Abstract:

The tools provided by option-pricing theory are used to examine the wealth effects of interfirm cash tender offers. The analysis provides evidence consistent with the "synergy" theory of corporate takeovers and has implications concerning the economic effects of regulations of cash tender offers. The analysis further suggests that the market prices information uncertainty in a manner not captured by the standard Capital Asset Pricing Model. The study introduces a technique for unbundling the prices of a primary asset and a contingent claim when only the prices of the combination are observed. (Reprinted by permission of the publisher.)

Prices and rates, Stocks, Acquisitions and mergers, Stock prices, Tender offers (Securities), Tender offers

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The shelf registration of debt and self selection bias

Article Abstract:

Prior studies report lower issue costs for shelf registered debt and conclude that the benefits of increased underwriter competition can be realized by those firms using this registration procedure. This study reexamines the purported superiority of issuing debt via shelf registration, and finds that the savings in issue costs displayed by earlier studies can be attributed to a self selection bias and not the method of registration. (Reprinted by permission of the publisher.)

Research, Securities, Debt, Recording and registration

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