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THIS PAPER REPORTS an empirical study of recent flotation costs and attempts to rectify several deficiencies associated with earlier studies based on flotation experience from 10 to 35 years ago. Two of those studies are largely descriptive [3, 4], while the other two have received some criticism for technical weaknesses [1, 2]. With machine-readable underwriting cost data available for the first time [5], it is now possible to correct some of these deficiencies. In the current study, variables used in prior studies and other variables suggested by theory are tested on 1971-1972 data in an effort to explain the flotation costs of both bond and common stock issues. After a brief description of data and methodology, the results of the issuance cost factor and regression analyses are presented and conclusions are drawn. * The authors are Professor and Assistant Professor of Finance, University of Connecticut, and Associate Professor of Finance, University of Southern California, respectively. We would like to acknowledge the helpful comments of G.A. Whitmore, the computer assistance of Peter O'Karma, and the data collection by the SEC. All responsibility, of course, rests with the authors. 1. A "unit offering" involves a combination of two securities sold as one package, such as common stock with debentures or detachable warrants.

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