Managerial Ability CEO Duality And The Choice Of Seasoned Equity Offerings

Abstract

We provide contrasting evidence on the role of managerial ability and chief executive officer (CEO) duality on the issuance decision of seasoned equity offerings (SEOs) in the U.S. market. We find that firms with higher managerial ability choose accelerated SEOs while firms with CEO duality prefer firm commitment SEOs. Our result is robust after controlling for various internal and external governance mechanisms addressing the problem of endogeneity and a number of alternative specifications. Our study supports the notion that a higher managerial ability is perceived as a positive quality certification while CEO-chairman duality position is considered as a negative quality certification on firms' information environments.