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Seasoned Equity Offerings: Stock Market Liquidity and the Rights Offer Paradox

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  • Edith Ginglinger
  • Laure Matsoukis
  • Fabrice Riva

Abstract

This paper examines the impact of market liquidity on seasoned equity offerings (SEO) characteristics in France. We find that, besides blockholders' takeup, liquidity is an important determinant of SEO flotation method choice. We document higher direct equity offering flotation costs, but also improved stock market liquidity after public offerings and standby rights relative to uninsured rights. After controlling for endogeneity in the choice of SEO flotation method, we find that pure public offerings and standby rights are comparable in terms of direct costs and liquidity improvement. Our results provide new insights as to why firms choose public offerings despite apparently higher costs.
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Suggested Citation

  • Edith Ginglinger & Laure Matsoukis & Fabrice Riva, 2013. "Seasoned Equity Offerings: Stock Market Liquidity and the Rights Offer Paradox," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 40(1-2), pages 215-238, January.
  • Handle: RePEc:bla:jbfnac:v:40:y:2013:i:1-2:p:215-238
    DOI: 10.1111/jbfa.2013.40.issue-1-2
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    Cited by:

    1. Thomas David & Edith Ginglinger, 2015. "When Cutting Dividends Is Not Bad News: The Case Of Optional Stock Dividends," Post-Print hal-01637541, HAL.
    2. repec:dau:papers:123456789/15219 is not listed on IDEAS
    3. Johannes Atle Skjeltorp & Bernt Arne Ødegaard, 2015. "When Do Listed Firms Pay for Market Making in Their Own Stock?," Financial Management, Financial Management Association International, vol. 44(2), pages 241-266, June.

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