At-the-Market (ATM) Offerings

Abstract

Facilitated in 2008, “at-the-market” (ATM) equity offerings are direct share issuances to secondary market investors. Their use has grown markedly, and in 2015 the number of ATMs relative to SEOs was 40%, while total ATM proceeds relative to total SEO proceeds was nearly one-fourth. ATMs forgo underwriters and shares are “dribbled-out” over many months. Firms’ choices between SEOs (either accelerated or fully-marketed) and ATMs, support the costly certification hypothesis of Chemmanur and Fulghieri (1994). Ex-post, firms’ ATM proceeds largely associate with cash buildup. We conclude that ATMs are likely a permanent fixture in the follow-on equity issuance landscape.