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Practitioner perspectives on the seasoned equity offering process in the UK

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  • Burton, Bruce
  • Helliar, Christine
  • Power, David

Abstract

Institutional practices around the time of equity offers by listed firms have recently been the subject of scrutiny by UK regulatory authorities including the former Monopolies and Mergers Commission. Moreover, several published studies indicate that managers in both Britain and the US continue to make extensive use of the equity issue methods that cause the most harm to shareholders' wealth. To investigate how and why firms decide between alternative offering methods, this paper reports the results of 11 interviews conducted with various parties involved in the share issue process in the UK, including industrial firms, accountants and advisers, as well as a questionnaire sent to the senior management of companies with recent experience of making share offers. The results indicate: (i) that the decision is contingent on the combined impact of a range of factors, particularly input from advisers and (ii) that a case can be made for re-examining the stringency of the UK's pre-emption guidelines.

Suggested Citation

  • Burton, Bruce & Helliar, Christine & Power, David, 2005. "Practitioner perspectives on the seasoned equity offering process in the UK," The British Accounting Review, Elsevier, vol. 37(2), pages 153-175.
    • Handle: RePEc:eee:bracre:v:37:y:2005:i:2:p:153-175
    DOI: 10.1016/j.bar.2004.09.005
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    Cited by:

    1. Seth Armitage, 2007. "Discounts in Placing Pre‐renounced Shares in Rights Issues," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(7‐8), pages 1345-1369, September.
    2. Dissanaike, Gishan & Faasse, Jonathan & Jayasekera, Ranadeva, 2014. "What do equity issuances signal? A study of equity issuances in the UK before and during the financial crisis," Journal of International Money and Finance, Elsevier, vol. 49(PB), pages 358-385.
    3. Weetman, Pauline, 2006. "Discovering the ‘international’ in accounting and finance," The British Accounting Review, Elsevier, vol. 38(4), pages 351-370.
    4. Seth Armitage, 2010. "Block Buying and Choice of Issue Method in UK Seasoned Equity Offers," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 37(3-4), pages 422-448.
    5. Seth Armitage, 2010. "Block Buying and Choice of Issue Method in UK Seasoned Equity Offers," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 37(3‐4), pages 422-448, April.

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