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At-the-Market Offerings

Published online by Cambridge University Press:  10 September 2018

Matthew T. Billett ,
Ioannis V. Floros  and
Jon A. Garfinkel
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Abstract

We study at-the-market (ATM) equity offerings, which are direct share issuances sold in the secondary market that forgo underwriters and “dribble-out” shares over time rather than raising them all at once. Enabled in 2008, their use has increased dramatically, and in 2016, their incidence and total proceeds were, respectively, 63% and 26% of those for seasoned equity offerings (SEOs). Determinants of firms’ choice between ATMs and SEOs are consistent with the costly certification hypothesis of Chemmanur and Fulghieri (1994). We also find that 65% of ATM proceeds are used to stockpile cash compared to 84% of SEO proceeds.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 54 , Issue 3 , June 2019 , pp. 1263 - 1283
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2018 

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Footnotes

1

We are grateful to Paul Malatesta (the editor) and especially Jay Ritter (the referee) for guidance and suggestions. We also thank Audra Boone, Dave Mauer, Daniel C. de Menocal, Jr., Ann Sherman, Joshua White, and seminar participants at the University of Mississippi for helpful comments. Part of the analysis in the paper was completed while Floros was visiting the U.S. Securities and Exchange Commission (SEC). The views expressed herein are those of the authors and do not necessarily represent the views of the SEC. Jeffrey Emrich, Jinsook Lee, and Dongping Xie provided excellent research assistance.

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