Graduation Year

2005

Document Type

Dissertation

Degree

Ph.D.

Degree Granting Department

Business Administration

Major Professor

Scott Besley.

Keywords

Equity financing, Debt financing, Analyst coverage, Information asymmetry, Security offerings, Investor optimism

Abstract

I investigate the impacts that information production, information asymmetry have on firms financing choices 3/4 equity financing or debt financing. I find that equity issue announcements encourage more information production than debt issue announcements, which in turn raises the probability of equity financing. In addition, the post-issue stock market performance is positively associated with information production. The results are robust after controlling for investor optimism. I also apply the Heckmans two-step procedure to jointly investigate firms financing choices and offering costs. I find that security-issuing firms choose the less-costly financing type.

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