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| Author: | Buhner, T. Kaserer, C. |
| Title: | The Structure of External Financing Costs and the Economies of Scale View: New Evidence from Seasoned Equity Offerings in Germany |
| Journal: | European Financial Management
2002 : SEP, VOL. 8:3, p. 315-338 |
| Index terms: | CAPITAL GROWTH QUALITY UNDERWRITING STOCK MARKETS GERMANY |
| Language: | eng |
| Abstract: | This paper is focused on the cost of raising equity capital in Germany. In the spirit of Altinkilic and Hansen (2000) it challenges the conventional wisdom that flotation costs are characterised by economies of scale. For a sample of 120 SEOs on the German capital market over the years 1993-98 it is found that average total flotation costs amount to 1.61% of gross proceeds, while average underwriting fees are about 1.32%. Moreover, it turns out that flotation costs rise the larger the free float of the company is and the larger the share of stocks offered within a firm commitment cash offering is. As far as the economies of scale view is concerned, the authors do not find clear evidence in favour of decreasing marginal flotation costs. |
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