Topic: Corporate Cash Shortfalls and Financing Decisions

Speaker: Jay R. Ritter, Professor of Finance, Warrington College of Business Administration, University of Florida

Date: June 15th (Mon.)

Time: 10:00-11:30am  

Location: Building 4, Room 101

Language: English

Abstract:

An influential paper by DeAngelo, DeAngelo, and Stulz (2010) concludes that near-term cash needs are the primary motive for seasoned equity offerings. We find that this is even more true for debt issues. Conditional on external financing, Tobin’s Q and firm size are highly important predictors for the choice between debt and equity, even for firms that are running out of cash. Our findings suggest that a near-term cash need is the primary motive for debt issues, but market timing, precautionary saving, and corporate lifecycle motives are of primary importance for equity issues and the debt versus equity choice.

About the speaker:

Jay R. Ritter is Professor of Finance at Warrington College of Business Administration, University of Florida. Professor Ritter received his B.A., M.A. and Ph.D. in Finance from University of Chicago. His research interests are mainly in initial public offerings, asset pricing, valuation, and investment banking. Professor Ritter teaches corporate finance at the undergraduate, M.B.A. and Ph.D. levels. He is a leading academic authority on the market for newly issued stock. He has previously served on the faculties of the University of Pennsylvania’s Wharton School, the University of Michigan, and was a visiting professor at the MIT Sloan School of Management. His papers have appeared in Journal of Finance, Review of Financial Studies, Financial Management and Journal of Financial Economics and other leading finance journals.