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Three Essays on the Costs of External Financing

This dissertation studies external financing costs of industrial firms and real estate investment trusts. The first chapter examines investors' reactions to the announcement of
seasoned equity offers (SEOs) in the wake of the recent financial crisis. We document announcement effects that are twice as large as the historical norm, and this effect is driven by
accelerated SEOs. Prior the crisis, accelerated offers were used for smaller offers and by firms with a more elastic demand curve, whereas after the crisis accelerated offers are larger
than before and used by firms with less elastic demand curves. Moreover, accelerated offers are associated with a lack of time for adequate underwriter due diligence, which is especially
critical during uncertain economic times. The second chapter examines whether corporate governance mitigates the negative effects of the exogenous shock to financing and investment for
real estate investment trusts (REITs) during the 2007 – 2008 financial crisis. We find that net debt issuance, real estate asset growth, and total asset growth experienced significant
declines after the onset of the crisis, while net equity issuance only declines for firms with the lowest corporate governance scores. Internal governance measures (e.g. board composition,
shareholder rights, and audit quality) alleviate this decline in financing and investment with the effect being more pronounced among financially constrained firms and those that are less
cash constrained. From a valuation perspective, strong internal governance is associated with more favorable investor reactions to the announcements of debt and equity offers in the crisis
period. The third chapter examines differences in the external financing costs of accelerated and fully marketed SEOs in REITs over the period 1990 – 2013. Using a two-stage endogenous
switching regression model that controls for potential self-selection bias, we find that accelerated offers have significantly lower gross spreads and less underpricing than their
counterparts, while there does not appear to be a significant difference in the announcement effects of both issuance methods. In particular, the gross spreads and underpricing of firms
that utilize accelerated offers are significantly lower translating to costs savings of roughly $10 million per issue. The intended use of proceeds does not differentially affect either
announcement effects or the level of underpricing, and post-issue stock returns in the subsequent three months are not significantly different by issuance method. / A Dissertation submitted to the Department of Finance in partial fulfillment of the Doctor of Philosophy. / Summer Semester 2015. / June 30, 2015. / Includes bibliographical references. / C. F. Sirmans, Professor Co-Directing Dissertation; Donald Autore, Professor Co-Directing Dissertation; G. Stacy Sirmans, University Representative;
Dean Gatzlaff, Committee Member; David Peterson, Committee Member.
ContributorsJones, Timothy (authoraut), Sirmans, C. F. (professor co-directing dissertation), Autore, Donald M. (professor co-directing dissertation), Sirmans, G. Stacy (university representative), Gatzlaff, Dean H. (committee member), Peterson, David R. (David Robert) (committee member), Florida State University (degree granting institution), College of Business (degree granting college), Department of Finance (degree granting department)
PublisherFlorida State University
Source SetsFlorida State University
LanguageEnglish, English
Detected LanguageEnglish
TypeText, text
Format1 online resource (181 pages), computer, application/pdf

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