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Seasoned equity issues in a closely held market: evidence from France

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Author Info

  • Edith Ginglinger

    () (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX)

  • Jean-François Gajewski

Abstract

This 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 Info

Paper provided by HAL in its series Post-Print with number halshs-00138293.

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Date of creation: 2002
Date of revision:
Publication status: Published, European Finance Review, 2002, 6, 3, 291-319
Handle: RePEc:hal:journl:halshs-00138293

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00138293/en/
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Keywords: seasoned equity issues; flotation methods; ownership structure.;

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References

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  1. Heflin, Frank & Shaw, Kenneth W., 2000. "Blockholder Ownership and Market Liquidity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(04), pages 621-633, December.
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Citations

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Cited by:
  1. Suchard, Jo-Ann, 2005. "The use of stand alone warrants as unique capital raising instruments," Journal of Banking & Finance, Elsevier, vol. 29(5), pages 1095-1112, May.
  2. Koenig-Matsoukis, Laure, . "Financial intermediation and the rights offer paradox," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/4430, Université Paris-Dauphine.
  3. Suchard, Jo-Ann & Singh, Manohar, 2006. "The determinants of the hybrid security issuance decision for Australian firms," Pacific-Basin Finance Journal, Elsevier, vol. 14(3), pages 269-290, June.
  4. Adaoglu, Cahit, 2006. "Market reaction to "unsweetened" and "sweetened" rights offerings in an emerging European stock market," Journal of Multinational Financial Management, Elsevier, vol. 16(3), pages 249-268, July.
  5. Koenig-Matsoukis, Laure & Riva, Fabrice & Ginglinger, Edith, . "Stock market liquidity and the rights offer paradox," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/2939, Université Paris-Dauphine.
  6. Malhotra, Madhuri Malhotra & M., Thenmozhi & Gopalaswamy, Arun Kumar, 2012. "Liquidity changes around bonus and rights issue announcements: Evidence from manufacturing and service sectors in India," MPRA Paper 41216, University Library of Munich, Germany.
  7. Ginglinger, Edith & Koening-Matsoukis, Laure & Riva, Fabrice, 2013. "Seasoned equity offerings: Stock market liquidity and the rights offer paradox," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/10852, Université Paris-Dauphine.
  8. Mohamed Faker Klibi & Hamadi Matoussi, 2007. "Gestion Des Resultats Et Performance Comptable Et Boursiere Des Entreprises Émettrices De Nouvelles Actions," Post-Print halshs-00534752, HAL.
  9. Kabir, Rezaul, 2003. "Corporate Financing in The Netherlands: Some Empirical Evidence," EIFC - Technology and Finance Working Papers 32, United Nations University, Institute for New Technologies.
  10. Bozos, Konstantinos & Nikolopoulos, Konstantinos, 2011. "Forecasting the value effect of seasoned equity offering announcements," European Journal of Operational Research, Elsevier, vol. 214(2), pages 418-427, October.
  11. Kabir, Rezaul & Roosenboom, Peter, 2003. "Can the stock market anticipate future operating performance? Evidence from equity rights issues," Journal of Corporate Finance, Elsevier, vol. 9(1), pages 93-113, January.
  12. Errunza, Vihang R. & Miller, Darius P., 2003. "Valuation effects of seasoned global equity offerings," Journal of Banking & Finance, Elsevier, vol. 27(9), pages 1611-1623, September.
  13. Gajewski, Jean-Francois & Ginglinger, Edith & Lasfer, Meziane, 2007. "Why do companies include warrants in seasoned equity offerings?," Journal of Corporate Finance, Elsevier, vol. 13(1), pages 25-42, March.
  14. Hatem Mansali, 2009. "La gestion des résultats et les performances comptables à long terme des entreprises françaises émettrices d’actions," Revue Finance Contrôle Stratégie, revues.org, vol. 12(4), pages 39-83, December.
  15. Lasfer, Meziane & Ginglinger, Edith & Gajewski, Jean-François, . "Why do Companies Include Warrants in Seasoned Equity Offerings: The case of French Unit Offerings," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/2917, Université Paris-Dauphine.

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