Analyst coverage and the cost of raising equity capital: Evidence from underpricing of seasoned equity offerings

• Main Authors: BOWEN, Robert M., CHEN, Xia, CHENG, Qiang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2008
• Subjects: Analyst coverage; information asymmetry; cost of raising capital; underpricing; seasoned equity offering; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/826; https://ink.library.smu.edu.sg/context/soa_research/article/1825/viewcontent/SSRN_id417860.pdf
• Institution: Singapore Management University

Theorists have long recognized that information asymmetry among investors adversely affects the cost of raising equity capital (e.g., Diamond and Verrecchia 1991). When there is information asymmetry, relatively uninformed investors are reluctant to trade because of higher potential loss from transa...