IDEAS home Printed from https://ideas.repec.org/a/bla/eufman/v2y1996i3p299-310.html
   My bibliography  Save this article

Equity rights issues: Signalling vs issue price irrelevance hypothesis

Author

Listed:
  • Nickolaos V. Tsangarakis

Abstract

This study examines the relationship between common stock returns and the subscription price level of equity right offerings in Greece during the period 1981–90. the findings show that the associated stock returns are independent of the issue price. This evidence does not support the view that the issue price serves as a signal of the stock's true value.

Suggested Citation

  • Nickolaos V. Tsangarakis, 1996. "Equity rights issues: Signalling vs issue price irrelevance hypothesis," European Financial Management, European Financial Management Association, vol. 2(3), pages 299-310, November.
    • Handle: RePEc:bla:eufman:v:2:y:1996:i:3:p:299-310
    DOI: 10.1111/j.1468-036X.1996.tb00045.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-036X.1996.tb00045.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1468-036X.1996.tb00045.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    2. Eckbo, B. Espen & Masulis, Ronald W., 1992. "Adverse selection and the rights offer paradox," Journal of Financial Economics, Elsevier, vol. 32(3), pages 293-332, December.
    3. J. Russell Nelson, 1965. "Price Effects In Rights Offerings," Journal of Finance, American Finance Association, vol. 20(4), pages 647-650, December.
    4. Marsh, Paul, 1979. "Equity Rights Issues and the Efficiency of the UK Stock Market," Journal of Finance, American Finance Association, vol. 34(4), pages 839-862, September.
    5. Loderer, Claudio & Zimmermann, Heinz, 1988. "Stock offerings in a different institutional setting : The Swiss case, 1973-1983," Journal of Banking & Finance, Elsevier, vol. 12(3), pages 353-378, September.
    6. White, R. W. & Lusztig, P. A., 1980. "The Price Effects of Rights Offerings," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 15(1), pages 25-40, March.
    7. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    8. Scholes, Myron S, 1972. "The Market for Securities: Substitution versus Price Pressure and the Effects of Information on Share Prices," The Journal of Business, University of Chicago Press, vol. 45(2), pages 179-211, April.
    9. Mikkelson, Wayne H. & Partch, M. Megan, 1986. "Valuation effects of security offerings and the issuance process," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 31-60.
    10. Heinkel, Robert L & Schwartz, Eduardo S, 1986. "Rights versus Underwritten Offerings: An Asymmetric Information Approach," Journal of Finance, American Finance Association, vol. 41(1), pages 1-18, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Edirisinghe U. C & Nimal P.D, 2015. "Stock Price Reaction to Announcements of Right Issues and Debenture Issues: Evidence from Colombo Stock Exchange," International Journal of Business and Social Research, LAR Center Press, vol. 5(2), pages 67-76, February.
    2. Edirisinghe U. C & Nimal P.D, 2015. "Stock Price Reaction to Announcements of Right Issues and Debenture Issues: Evidence from Colombo Stock Exchange," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(2), pages 67-76, February.
    3. Consuelo Riaño Gil & Francisco Javier Ruiz Cabestre & Rafael Santamaría Aquilué, 2004. "Formación de precios de suscripción en el mercado bursátil español: algunas consideraciones," Investigaciones Economicas, Fundación SEPI, vol. 28(1), pages 141-191, January.
    4. Consuelo Riano & Fco. Javier Ruiz & Rafael Santamaria, 2007. "Determinants of the underpricing of new shares during the subscription period: empirical evidence from the Spanish stock exchange," Applied Financial Economics, Taylor & Francis Journals, vol. 17(7), pages 521-540.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhtaseb, Majed R. & Philippatos, George C., 1995. "Shareholder wealth effects of common stock offerings," Global Finance Journal, Elsevier, vol. 6(2), pages 175-193.
    2. Marsden, Alastair, 2000. "Shareholder wealth effects of rights issues: Evidence from the New Zealand capital market," Pacific-Basin Finance Journal, Elsevier, vol. 8(3-4), pages 419-442, July.
    3. Tan, Ruth S. K. & Chng, P. L. & Tong, Y. H., 2002. "Private placements and rights issues in Singapore," Pacific-Basin Finance Journal, Elsevier, vol. 10(1), pages 29-54, January.
    4. Consuelo Riano & Fco. Javier Ruiz & Rafael Santamaria, 2007. "Determinants of the underpricing of new shares during the subscription period: empirical evidence from the Spanish stock exchange," Applied Financial Economics, Taylor & Francis Journals, vol. 17(7), pages 521-540.
    5. Ferris, Stephen P. & Noronha, Gregory & McInish, Thomas, 1997. "New equity offerings in Japan: an examination of theory and practice," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 7(3), pages 185-200, October.
    6. Edirisinghe U. C & Nimal P.D, 2015. "Stock Price Reaction to Announcements of Right Issues and Debenture Issues: Evidence from Colombo Stock Exchange," International Journal of Business and Social Research, LAR Center Press, vol. 5(2), pages 67-76, February.
    7. Yan Zeng & Josie McLaren, 2015. "The impact of large public sales of Government assets: empirical evidence from the Chinese stock markets on a gradual and offer-to-get approach," Review of Quantitative Finance and Accounting, Springer, vol. 45(1), pages 137-173, July.
    8. Juan F. Martín‐Ugedo, 2003. "Equity Rights Issues in Spain: Flotation Costs and Wealth Effects," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(9‐10), pages 1277-1304, December.
    9. Marisetty, Vijaya B. & Marsden, Alastair & Veeraraghavan, Madhu, 2008. "Price reaction to rights issues in the Indian capital market," Pacific-Basin Finance Journal, Elsevier, vol. 16(3), pages 316-340, June.
    10. Balachandran, Balasingham & Faff, Robert & Jong, Len, 2005. "Announcements of bonus share options: Signalling of the quality of firms," Global Finance Journal, Elsevier, vol. 16(2), pages 180-190, December.
    11. 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.
    12. Edirisinghe U. C & Nimal P.D, 2015. "Stock Price Reaction to Announcements of Right Issues and Debenture Issues: Evidence from Colombo Stock Exchange," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(2), pages 67-76, February.
    13. Anderson, Hamish D. & Rose, Lawrence C. & Cahan, Steven F., 2006. "Differential shareholder wealth and volume effects surrounding private equity placements in New Zealand," Pacific-Basin Finance Journal, Elsevier, vol. 14(4), pages 367-394, September.
    14. Molin, Johan, 1996. "Shareholder gains from equity private placements: Evidence from the Stockholm Stock Exchange," SSE/EFI Working Paper Series in Economics and Finance 101, Stockholm School of Economics.
    15. Slovin, M. B. & Sushka, M. E. & Lai, K. W. L., 2000. "Alternative flotation methods, adverse selection, and ownership structure: evidence from seasoned equity issuance in the U.K," Journal of Financial Economics, Elsevier, vol. 57(2), pages 157-190, August.
    16. Fungáčová, Zuzana & Godlewski, Christophe J. & Weill, Laurent, 2020. "Does the type of debt matter? Stock market perception in Europe," The Quarterly Review of Economics and Finance, Elsevier, vol. 75(C), pages 247-256.
    17. 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.
    18. 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.
    19. Pradip Banerjee & Soumya Guha Deb, 2015. "The Choice between QIP and Rights Issue: Evidence from India," Global Business Review, International Management Institute, vol. 16(5_suppl), pages 155-174, October.
    20. Consuelo Riaño Gil & Francisco Javier Ruiz Cabestre & Rafael Santamaría Aquilué, 2004. "Formación de precios de suscripción en el mercado bursátil español: algunas consideraciones," Investigaciones Economicas, Fundación SEPI, vol. 28(1), pages 141-191, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:eufman:v:2:y:1996:i:3:p:299-310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/efmaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.