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Rights Offering Announcements and the Efficiency of the Kuwaiti Market

Author

Listed:
  • Bader Alhashel

    (Kuwait University)

Abstract

This study tested the semi-strong form of the Efficient Market Hypothesis in the Kuwait Stock Exchange (KSE). Previous studies examining the KSE have found conflicting evidence on whether it is weakly efficient. This test is conducted by examining the behavior of stock prices around the date of rights offering announcements to determine how long prices take to reflect the new information. Based on a sample of 69 rights offerings over the period 2004-2013 and using event study methodology, we find that prices incorporate new information within an average of 4 days. We take this observation as evidence that the Kuwaiti market is semi-strong efficient.

Suggested Citation

  • Bader Alhashel, 2015. "Rights Offering Announcements and the Efficiency of the Kuwaiti Market," Proceedings of Economics and Finance Conferences 2203849, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:2203849
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    File URL: https://iises.net/proceedings/4th-economics-finance-conference-london/table-of-content/detail?cid=22&iid=004&rid=3849
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    More about this item

    Keywords

    Efficient Market Hypothesis; Semi-strong; Rights issues; Event study; Emerging market;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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