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Seasoned equity issues in a closely held market: evidence from France

Listed author(s):
  • Edith Ginglinger


    (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)

  • Jean-François Gajewski

This paper examines seasoned equity offerings in France. Even though a rightsoffering is the primary flotation method, French companies are increasingly using therelatively expensive public offering method. We show that the market reaction to theannouncement of seasoned equity issues is significantly negative for rights issues andinsignificantly negative for public offerings. Our results suggest that the adverseselection effect is greater for rights issues than for public offerings, due to strongerunderwriter certification for the public offerings. We find that the share price effect ispositively related to blockholders take-up renouncements for firms with priorconcentrated ownership. For these firms, the favourable ownership dispersion effectoffsets the adverse selection effect.

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Paper provided by HAL in its series Post-Print with number halshs-00138293.

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Date of creation: 2002
Publication status: Published in European Finance Review, 2002, 6 (3), pp.291-319. 〈10.1023/A:1022024925877〉
Handle: RePEc:hal:journl:halshs-00138293
DOI: 10.1023/A:1022024925877
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