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

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

Author Info

Edith Ginglinger () (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX)
Jean-François Gajewski

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Edith Ginglinger

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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Paper provided by HAL in its series Post-Print with number halshs-00138293_v1.

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Date of creation: 2002
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Publication status: Published, European Finance Review, 2002, 6, 3, 291-319
Handle: RePEc:hal:journl:halshs-00138293_v1

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Kabir, R. & Roosenboom, P., 2000. "Can the stock market anticipate future operating performance? : evidence from equity rights issues," Discussion Paper 22, Tilburg University, Center for Economic Research. [Downloadable!]
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. [Downloadable!]
Kabir, R. & Roosenboom, P.G.J., 2002. "Can the stock market anticipate future operating performance? Evidence from equity rights issues," Research Paper ERS-2002-102-F&A Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]

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