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.
