Long‐Term Performance Following Rights Issues and Open Offers in the UK

Proches Ngatuni, John Capstaff and Andrew Marshall

Journal of Business Finance & Accounting, 2007, vol. 34, issue 1‐2, 33-64

Abstract: Abstract: This study finds evidence of significant long‐term underperformance following rights issues made during 1986‐95 in the UK. The findings are resilient to a number of methodological controls. In contrast, our results for a smaller sample of open offers made during 1991‐95 show strong positive performance over a 5‐year post‐issue period, implying that firms making open offers had better growth prospects than firms making rights issues. During 1986‐90, a period when open offers were rarely used, firms appeared to be making rights issues to exploit overvaluation. However, this was not evident for rights issues made during 1991‐95, a period when open offers were more commonly used.

Date: 2007
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https://doi.org/10.1111/j.1468-5957.2006.00653.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:34:y:2007:i:1-2:p:33-64

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