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Voluntary Disclosure And Equity Offerings
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Book Synopsis Voluntary Disclosure and Equity Offerings by : Mark H. Lang
Download or read book Voluntary Disclosure and Equity Offerings written by Mark H. Lang and published by . This book was released on 2012 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine corporate disclosure activity around seasoned equity offerings and its relation to stock prices. Beginning six months before the offering, our sample issuing firms dramatically increase their disclosure activity, particularly for the categories of disclosure over which firms have the most discretion. The increase is significant after controlling for the firm's current and future earnings performance and tends to be largest for firms with selling shareholders participating in the offering. However, there is no change in the frequency of forward-looking statements prior to the equity offering, something that is expressly discouraged by the securities law.Firms that maintain a consistent level of disclosure experience price increases prior to the offering and only minor price declines at the offering announcement relative to the control firms, suggesting that disclosure may have reduced the information asymmetry inherent in the offering. Firms that substantially increase their disclosure activity in the six months prior to the offering also experience price increases prior to the offering relative to the control firms, but suffer much larger price declines at the announcement of their intent to issue equity, suggesting that the disclosure increase may have been used to quot;hype the stockquot; and the market may have partially corrected for the earlier price increase. Firms that maintain a consistent disclosure level have no unusual return behavior relative to the control firms subsequent to the announcement, while the firms that quot;hypedquot; their stock continue to suffer negative returns, providing further evidence that the increased disclosure activity may have been quot;hype,quot; and suggesting that the quot;hypequot; may have been successful in lowering the firms' cost of equity capital.
Book Synopsis Voluntary Disclosure During Equity Offerings by : Mark H. Lang
Download or read book Voluntary Disclosure During Equity Offerings written by Mark H. Lang and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine corporate disclosure activity around seasoned equity offerings and its effect on stock prices. If a firm's disclosures can increase the proceeds from security issuance, either by reducing information asymmetry or by "hyping" the stock, it will enjoy a lower cost of equity capital at the issuance. Potentially offsetting this incentive, the 1933 Securities Act restricts certain disclosure activities prior to equity offerings. Beginning six months before the offering, our sample of issuing firms dramatically increase their disclosure activity relative to control firms, particularly for the categories of disclosure over which firms have the most discretion. The increase is significant after controlling for the firm's current and future earnings performance and is largest for firms with selling shareholders participating in the offering. However, there is no change in the frequency of forward-looking statements prior to the equity offering, which is expressly prohibited by the securities law. Firms that maintain a consistently high level of disclosure enjoy price increases prior to the offering and only minor price declines at the offering announcement, consistent with disclosure reducing the information asymmetry inherent in the offering. Firms that substantially increase their disclosure activity in the six months prior to the offering also enjoy price increases prior to the offering but suffer much larger price declines at the announcement of their intent to issue equity, consistent with the disclosure increase being used to "hype the stock" and the market partially correcting for the earlier price increase. Firms that maintain a consistently high disclosure level have no unusual return behavior subsequent to the announcement, while the firms that "hyped" their stock continue to suffer negative returns, reinforcing the conclusion that the increased disclosure activity was indeed "hype," but also demonstrating that the hype was successful in lowering the firms' cost of equity capital.
Book Synopsis Voluntary Disclosure, Information Asymmetry, and Insider Selling Through Secondary Equity Offerings by : Christine I. Wiedman
Download or read book Voluntary Disclosure, Information Asymmetry, and Insider Selling Through Secondary Equity Offerings written by Christine I. Wiedman and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the relation of voluntary disclosure of management earnings forecasts and information asymmetry to insider selling through secondary equity offerings. We hypothesize that the pattern of voluntary disclosure and level of information asymmetry prior to secondary equity offerings differs systematically based on the identity of the seller. Specifically, we predict a greater frequency of voluntary disclosure and decreased level of information asymmetry when managers sell their stock through a secondary offering. We examine this hypothesis in a cross-sectional analysis of 210 secondary equity offerings from 1984-91, using a two-stage conditional maximum likelihood simultaneous equations estimation procedure, which allows for possible endogeneity in the manger?s decision to sell stock. Consistent with our predictions, we document a significantly positive association between managerial participation and voluntary disclosure of earnings forecasts in the nine-month period prior to registration of the offering. We also document a significantly negative association between managerial participation and two proxies for information asymmetry. The findings provide evidence that managers act as if reduced information asymmetry correlates with a reduced cost of capital.
Book Synopsis Voluntary Disclosure and Information Asymmetry by : Nemit Shroff
Download or read book Voluntary Disclosure and Information Asymmetry written by Nemit Shroff and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In 2005, the SEC enacted the Securities Offering Reform (Reform), which relaxes 'gun jumping' restrictions, thereby allowing firms to more freely disclose information before equity offerings. We examine the effect of the Reform on voluntary disclosure behavior before equity offerings and the associated economic consequences. We find that firms provide significantly more pre-offering disclosures after the Reform. Further, we find that these pre-offering disclosures are associated with a decrease in information asymmetry and a reduction in the cost of raising equity capital. Our findings not only inform the debate on the market effect of the Reform, but also speak to the literature on the relation between voluntary disclosure and information asymmetry by examining the effect of quasi-exogenous changes in voluntary disclosure on information asymmetry, and thus a firm's cost of capital.
Book Synopsis Limits to Voluntary Disclosure in Efficient Markets by : Bharat Sarath
Download or read book Limits to Voluntary Disclosure in Efficient Markets written by Bharat Sarath and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In competitive markets, prices offered by investors play a dual role: they must induce the firm to make truthful disclosures about its expected cash flows and they must also be efficient, i.e., equal the expected future cash flows to the buyer conditional on the disclosed information. We show that these requirements may exert opposing influences resulting in equilibrium disclosures being partial; that is, they might cause firms to reveal some, but not all of the valuation relevant information possessed by the firm. We then characterize the maximal level of information that can be elicited through efficient prices. We apply our analysis to the study of voluntary disclosures in the context of equity offerings, leases and sale of tax-loss carry-forwards and compare these to the level of currently mandated disclosures under GAAP.
Book Synopsis Give it to Me Straight by : John R. Busenbark
Download or read book Give it to Me Straight written by John R. Busenbark and published by . This book was released on 2017 with total page 115 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managers0́9 control over the timing and content of information disclosure represents a significant strategic tool which they can use at their discretion. However, extant theoretical perspectives offer incongruent arguments and incompatible predictions about when and why managers would release inside information about their firms. More specifically, agency theory and theories within competitive dynamics provide competing hypotheses about when and why managers would disclose inside information about their firms. In this study, I highlight how voluntary disclosure theory may help to coalesce these two theoretical perspectives. Voluntary disclosure theory predicts that managers will release inside information when managers perceive that the benefits outweigh the costs of doing so. Accordingly, I posit that competitive dynamics introduce the costs associated with disclosing information (i.e., proprietary costs) and that agency theory highlights the benefits associated with disclosing information. Examining the context of seasoned equity offerings (SEOs), I identify three ways managers can use information in SEO prospectuses. I hypothesize that competitive intensity increases proprietary costs that will reduce disclosure of inside information but will increase discussing the organization positively. I then hypothesize that capital market participants (e.g., security analysts and investors) may prefer managers to provide more, clearer, and positive information about the SEO and their firms. I find support for many of my hypotheses.
Book Synopsis Voluntary Disclosure and Informed Trading in the IPO Market by : Praveen Kumar
Download or read book Voluntary Disclosure and Informed Trading in the IPO Market written by Praveen Kumar and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine voluntary disclosure and capital investment by an informed manager in an initial public offering (IPO) in the presence of informed and uninformed investors. We find that in equilibrium, disclosure is more forthcoming -- and investment efficiency is lower -- when a greater fraction of the investment community is already informed. Moreover, managers disclose more information when the likelihood of an information event is higher, more equity is issued, or the cost of information acquisition is lower. Investment efficiency and the expected level of underpricing are non-monotonic in the likelihood that the manager is privately informed.
Book Synopsis Economic Determinants and Consequences of Voluntary Disclosure of Internal Control Effectiveness by : Chong-ŭn Yi
Download or read book Economic Determinants and Consequences of Voluntary Disclosure of Internal Control Effectiveness written by Chong-ŭn Yi and published by . This book was released on 2008 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation investigates the economic determinants of firms' decisions to voluntarily disclose internal control weaknesses, and the economic consequences of such disclosures, in the context of companies' initial public offerings (IPOs) of equity securities. I find that IPO firms with greater potential litigation risk and restated pre-IPO financial statements are more likely to disclose internal control weaknesses over pre-IPO financial reporting. In addition, I find that voluntary disclosure of internal control weaknesses and the related remediation procedures is negatively associated with underpricing, indicating that ex ante uncertainty about the new issues' value is reduced. Further, IPO firms benefit from such voluntary disclosure through increased IPO proceeds. The results also suggest that the new internal control disclosure requirements under SOX sections 302 and 404 have induced IPO firms to voluntarily disclose internal control weaknesses, contributing to lower information asymmetry between IPO firms and uninformed investors.
Book Synopsis Disclosure of Intended Use of Proceeds and Underpricing in Initial Public Offerings by : Andrew J. Leone
Download or read book Disclosure of Intended Use of Proceeds and Underpricing in Initial Public Offerings written by Andrew J. Leone and published by . This book was released on 2006 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use the context of a company's IPO of equity securities as a capital-markets setting to empirically study the economic consequences of endogenous disclosure. In particular, we examine the relation between the extent of dollar detail an IPO issuer provides regarding their intended use of proceeds and first-day underpricing. We document substantial variation in the specificity of this disclosure and find that an increase in such specificity is associated with lower IPO underpricing. Overall, our results suggest that IPOs that provide specific use-of-proceeds disclosures have less ex ante uncertainty, in the sense that these disclosures help investors estimate the dispersion of secondary market values. Our paper contributes to the empirical accounting literature by documenting an association between voluntary disclosure and what is arguably the foremost cost of raising initial equity capital (i.e., IPO underpricing).
Book Synopsis SEC News Digest by : United States. Securities and Exchange Commission
Download or read book SEC News Digest written by United States. Securities and Exchange Commission and published by . This book was released on 1977-07 with total page 644 pages. Available in PDF, EPUB and Kindle. Book excerpt: Lists documents available from Public Reference Section, Securities and Exchange Commission.
Book Synopsis The Genesis of Voluntary Disclosure by : Kristian D. Allee
Download or read book The Genesis of Voluntary Disclosure written by Kristian D. Allee and published by . This book was released on 2019 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate a firm's decision to initiate earnings guidance during its first year as a public company following its initial public offering (IPO), which we label “early guidance.” Using a sample of firms with IPOs between 2001 and 2010, we find that almost 60% of our IPO firms provide early guidance and that only one third of the firms that do not provide guidance during the first year subsequently decide to guide. Consistent with the importance of liquidity incentives following the IPO, we find that firms are significantly more likely to provide early guidance when their IPOs are backed by venture capital or private equity investors. Our results indicate that firms with higher IPO information quality are more likely to provide early earnings guidance. We also find that early guidance has significant implications for future disclosure choices. Firms that guide soon after the IPO are significantly more likely to guide again and to provide regular future guidance (i.e., they establish a regular guidance policy). Finally, we find evidence suggesting that the credibility of initial guidance is lower than that of subsequent guidance, and subsequent guidance credibility relates to both the length of firms' guidance history and the accuracy of their initial guidance disclosures.
Book Synopsis New York Codifies Broad Voluntary Disclosure Program Offering No Penalties and No Prosecution ... Even for Prior Fraud by : Barbara T. Kaplan
Download or read book New York Codifies Broad Voluntary Disclosure Program Offering No Penalties and No Prosecution ... Even for Prior Fraud written by Barbara T. Kaplan and published by . This book was released on 2008 with total page 3 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Shareholder Litigation, Management Forecasts, and Productive Decisions during the Initial Public Offerings by : Yinghua Li
Download or read book Shareholder Litigation, Management Forecasts, and Productive Decisions during the Initial Public Offerings written by Yinghua Li and published by . This book was released on 2009 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a model to analyze the impact of shareholder litigation on managers' voluntary disclosure strategies in equity offerings. The major findings are as follows. First, under different economic parameters, the entrepreneur has two possible equilibrium disclosure strategies: full and partial disclosure. Of particular interest is the latter equilibrium, in which shareholder litigation can give the entrepreneur incentives to partially disclose her private information. Second, production decisions might be distorted by the entrepreneur's disclosure incentives. The full disclosure equilibrium is associated with underinvestment, while overinvestment exists in the partial disclosure equilibrium.The model is then used to examine the effect of regulatory polices on firms' disclosure incentives. It shows that relaxing the legal liability can result in more information flow to the public. However, it also leads to a higher rate of lawsuits and an increase in deadweight litigation costs.
Book Synopsis Voluntary Disclosure in a Multi-Audience Setting by : Sanjeev Bhojraj
Download or read book Voluntary Disclosure in a Multi-Audience Setting written by Sanjeev Bhojraj and published by . This book was released on 2014 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the issue of voluntary disclosure in multi-audience settings by focusing on the electric utility industry as it transitions toward deregulation. We consider three target audiences: industry regulators, capital market participants, and product market competitors. As predicted, we find that utilities tend to disclose less strategic information in jurisdictions where the stranded cost recovery issue is unresolved, consistent with incentives to appear quot;weakquot; to regulators. Further, we find that utilities whose viability in a deregulated environment is more uncertain tend to provide more disclosures, unless they face greater threat from competitors. These results are consistent with prior theoretical research on conflicting disclosure incentives to capital markets versus product markets.Key Words: Voluntary disclosure; Electric utilities; Deregulation.
Book Synopsis IPOs and Equity Offerings by : Ross Geddes
Download or read book IPOs and Equity Offerings written by Ross Geddes and published by Elsevier. This book was released on 2003-06-06 with total page 273 pages. Available in PDF, EPUB and Kindle. Book excerpt: An initial public offering (IPO) is one of the most significant events in corporate life. It follows months, even years of preparation. During the boom years of the late 1990s bull market, IPOs of growth companies captured the imagination and pocketbooks of investors like never before. This book goes behind the scenes to examine the process of an offering from the decision to go public to the procedures of a subsequent equity offering. The book is written from the perspective of an experienced investment banker describing the hows and whys of IPOs and subsequent equity issues. Each aspect of an IPO is illustrated with plenty of international examples pitched alongside relevant academic research to offer a combination of theoretical rigour and practical application. Topics covered are: - the decision to go public- legal and regulatory aspects of an offering; marketing and research- valuation and pricing- allocations of shares to investors - examination of fees and commissions* Global perpective: UK, European and US practices, regulations and examples, and case studies* First hand experience written by an IPO trader with academic rigour* Includes the changes in the market that resulted from 1998-2000 equity boom
Book Synopsis Earnings Quality by : Jennifer Francis
Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.
Download or read book IAS/ IFRS written by Vera Palea and published by FrancoAngeli. This book was released on 2006 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt:
