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Media type:
E-Article
Title:
Direct Equity Financing: A Resolution of a Paradox
Contributor:
Hansen, Robert S.;
Pinkerton, John M.
Published:
American Finance Association, 1982
Published in:
The Journal of Finance, 37 (1982) 3, Seite 651-665
Language:
English
ISSN:
0022-1082;
1540-6261
Origination:
Footnote:
Description:
When raising new equity capital managers have historically rejected the direct offer method favoring instead the seemingly more expensive underwritten public issue. This paper provides a resolution for this equity financing paradox by demonstrating empirically that firms which engage in direct offers enjoy a comparative cost advantage that is more than sufficient to account for the absolute reported cost differences between the two methods of equity financing.