IDEAS home Printed from
   My bibliography  Save this article

The ex-date effect of rights issues: evidence from the Italian stock market


  • Enrica Bolognesi
  • Angela Gallo


We investigate the effects on stock prices around the Ex-rights Dates (EDs) of rights offerings by firms listed on the Italian Stock Exchange. We focus on the period from January 2007 to April 2011, whereby several operations have been highly dilutive. Highly dilutive rights offerings show high subscription price discount of the new equities issued with respect to the prevailing stock market price. The anomalous behaviour of the prices attracted the attention of the Italian Authority for the Financial Markets (CONSOB). Our results demonstrate a significant average abnormal return of 5.85% on the ex-rights date, which is mostly driven by highly dilutive operations. In particular, we try to explain abnormal returns considering several variables related to the issue and to the issuer. We also control for differences across sectors. We find that the price-adjustment coefficient K explains most of the abnormal returns. We highlight that the stock price adjustment at the ED is so relevant in the case of highly dilutive operations to be similar to a stock splits and could have puzzled investors about the stock's fair price. Furthermore, we examine the consequences on the option rights market, the trading volume and the Italian derivative market.

Suggested Citation

  • Enrica Bolognesi & Angela Gallo, 2013. "The ex-date effect of rights issues: evidence from the Italian stock market," Applied Financial Economics, Taylor & Francis Journals, vol. 23(2), pages 149-164, January.
  • Handle: RePEc:taf:apfiec:v:23:y:2013:i:2:p:149-164
    DOI: 10.1080/09603107.2012.711936

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    Access and download statistics


    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:taf:apfiec:v:23:y:2013:i:2:p:149-164. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.