THE COSTS OF EQUITY ISSUES SINCE RULE 415 - A CLOSER LOOK

In this paper I re-examine the effect of shelf registration (SEC Rule 415) on the underwriter fees of firms issuing equity. The data indicat e that lower fees cannot be obtained by typical firms using the shelf procedure. Rather, previously documented evidence of lower underwriter spreads for shelf issues appears to be due to a selection bias in the firms choosing shelf registration. These firms enjoy a comparative co st advantage over other firms regardless of the registration procedure used.