At the Market (ATM) Offerings

Abstract

We study a new form of equity offering that emerged in 2008: “At-the-market” (ATM) offerings. Their use has increased significantly, and in 2011 total announced ATM issuance plans were nearly 10% that of traditional SEOs. The key differentiating characteristics of ATMs are their “best-efforts” issuance approach and the ability of firms to “dribble-out” equity issuance at opportune times, often over many months. We document some notable differences in characteristics between ATM and SEO firms. Moreover, ATM issuers appear to experience lower explicit issuance costs (fees), less negative event returns and less negative long-run returns, compared to standard SEO issuers. Finally, we find that firms adjust their dribble-out to reflect time-varying stock return characteristics.