The Significance and Certification of Shelf Registrations

Abstract

Capital acquisition has received increased attention as publicly-traded firms endured and are now slowly emerging from the financial crisis. Along those lines, we examine ten years of shelf offerings, from 1996 to 2005, as they offer a unique manner with which firms can enhance their capital positions while hedging short and intermediate-term movements in the equity markets. We find some firms rely on the efficiencies and flexibility afforded by shelf registrations (Securities and Exchange Commission Rule 415). We also document the increased utilization of the shelf procedure, which gained significant momentum over the period of this study. This pattern continued despite the lack of underwriter certification that attaches to traditional registered equity issues. Firms were likely attracted to the lower costs of shelf offerings and to the ability to issue securities as more favorable market environments developed during the two-year shelf “window” allowed during the period studied