Tick size and firm financing decisions: Evidence from a natural experiment
利用美国证监会2016年最小报价单位试点计划，研究发现最小报价单位增加促使企业更多发行股票而非债务，原因是投资者更愿获取基本面信息，降低了股权融资中的逆向选择成本。
Using the SEC’s 2016 Tick Size Pilot Program (TSPP) as a natural experiment, we investigate the effects of a tick size increase on firms’ choice of equity versus debt financing. We find that after the program’s implementation, TSPP-affected firms show a significant increase in equity issuance relative to that of debt. This finding is consistent with a reduction in adverse selection in equity financing due to more acquisition of fundamental information by these firms’ investors. In support of this inference, we show that the increase is concentrated among firms with investors that increase their information acquisition. We also find that the effect is more pronounced for firms that, prior to the program, have a higher level of concern about adverse selection in equity financing. Our study offers the novel insight that a tick size increase can affect firms’ financing choices because the increased tick size generates incentives for investors to acquire more fundamental information.