Journal of Financial Economics Vol. 124 No. 3 2017
The effects of removing barriers to equity issuance
Abstract
We study the consequences of a US deregulation allowing small firms to accelerate their public equity issuance. Post-deregulation, affected firms double their reliance on public equity and transition away from private investments in public equity compared to similar untreated firms. The net effect is a 5.7 percentage point or 49% increase in the annual probability of raising equity. This is accompanied by a reduction in equity issuance costs, an increase in investment, and a decrease in leverage. Our findings provide evidence that reducing equity issuance barriers benefits issuers even in highly developed markets.
- DOI
- 10.1016/j.jfineco.2017.03.008
- Volume
- 124
- Issue
- 3
- Pages
- 580-598
- Language
- en
- Sources
- crossref bibtex:phds-export.bib openalex