INVESTMENT BANKING FEES ON SEASONED EQUITY OFFERINGS: EVIDENCE FROM CANADIAN ISSUERS AFTER THE PASSAGE OF CANADIAN SOX

Arturo Rubalcava, University of Regina, Canada

Published in

JOURNAL OF INTERNATIONAL FINANCE STUDIES
Volume 18, Issue 1, p39-58, March 2018

ABSTRACT

This paper explores the effects of Canadian SOX (CSOX) on investment banking fees for seasoned equity offerings of Canadian issuers. Canadian SOX is a Canadian law equivalent to the U.S. Sarbanes-Oxley (USSOX) of 2002 aimed in improved financial disclosure of public corporations. It finds the investment banking fees to all offer announcements are not different between the period 1999-2005 (pre-CSOX) and the period 2006-2011 (post-CSOX). When comparing offers by Canadian issuers cross-listed in major U.S. exchanges with matched non-cross-listed issuers, the fees are higher for the former during the post-CSOX period only, after controlling for offer, firm and trade variables. Additionally, when comparing offers between marketed underwritten with bought deals, the fees are higher for marketed underwritten offers in the pre- and post-CSOX periods, respectively, – mostly for non-cross-listed issuers. This may justify why firms prefer issuing bought deals instead of marketed underwritten offers in the last years.

Keywords

Investment Banking Fees, Seasoned Equity Offerings, Canadian SOX, Sarbanes-Oxley Act, Cross-Listed, Bought Deals, Marketed Underwritten Offers.


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