Seasoned equity issues in a closely held market: evidence from France
AbstractThis paper examines seasoned equity offerings in France. Even though a rightsoffering is the primary flotation method, French companies are increasingly using therelatively expensive public offering method. We show that the market reaction to theannouncement of seasoned equity issues is significantly negative for rights issues andinsignificantly negative for public offerings. Our results suggest that the adverseselection effect is greater for rights issues than for public offerings, due to strongerunderwriter certification for the public offerings. We find that the share price effect ispositively related to blockholders take-up renouncements for firms with priorconcentrated ownership. For these firms, the favourable ownership dispersion effectoffsets the adverse selection effect.
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Bibliographic InfoPaper provided by HAL in its series Post-Print with number halshs-00138293.
Date of creation: 2002
Date of revision:
Publication status: Published, European Finance Review, 2002, 6, 3, 291-319
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seasoned equity issues; flotation methods; ownership structure.;
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