Developing capital markets generally lack the regulatory safeguards and rich informational sources that assist investors in judging new equity issues in modern markets. Focusing on the early stage capital market in interwar Australia, we calculate the success (underpricing and percentage raised) of 786 new equity issues, comparing initial public offerings, seasoned equity offerings, and rights issues. We examine whether the use of underwriters and the choice of security (ordinary or preference shares) affected the success of the equity issue. We find that certification by underwriters had no effect on capital-raising success once we controlled for firm-specific factors in the multivariate regressions, while underpricing and percentage raised varied by type of shares offered to investors.
|Journal||Economic History Review: a journal of economic and social history|
|Publication status||E-pub ahead of print - 11 Apr 2021|