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The long run performance of UK firms making multiple rights issues

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  • Iqbal, Abdullah
  • Akbar, Saeed
  • Shiwakoti, Radha K.

Abstract

This study examines the long run performance of firms offering multiple rights issues in the UK and differentiates between one-time and multiple issuers. By analysing a sample of 1146 rights issues offered by 788 London Stock Exchange listed industrial companies between 1988 and 2008, this study reports that firms making multiple rights issues do not experience significant long run underperformance following the third or subsequent issues. However, the one-time rights issuers do experience underperformance during the sample period. The findings of this study thus imply that those firms which are making multiple rights issues are of better quality and investors could avoid loses by investing in firms which had made more than one rights issue in the past. The results also suggest that researchers which are intending to examine the long run post-event performance of firms should control the incidence of similar events that had happened in previous years.

Suggested Citation

  • Iqbal, Abdullah & Akbar, Saeed & Shiwakoti, Radha K., 2013. "The long run performance of UK firms making multiple rights issues," International Review of Financial Analysis, Elsevier, vol. 28(C), pages 156-165.
    • Handle: RePEc:eee:finana:v:28:y:2013:i:c:p:156-165
    DOI: 10.1016/j.irfa.2013.03.003
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    More about this item

    Keywords

    Rights issues; Operating performance; Returns; Sequence in equity issues; Seasoned equity offerings; Multiple rights issues;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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