The Price Effects of Rights Offerings

R. W. White and P. A. Lusztig

Journal of Financial and Quantitative Analysis, 1980, vol. 15, issue 1, 25-40

Abstract: In the theoretical literature of finance, it has been assumed for some time that capital markets are efficient, with security prices reflecting all available information [10]. One purpose of this paper is to consider market efficiency in the context of rights offerings. It has recently been suggested, for example, that rights offerings afford positive abnormal returns [17,18]. This view was immediately countered by the comment that the number of rights issued, and inversely the issue price, cannot affect the market value of the total exrights equity market [21, p. 44]. No empirical evidence was offered on either side, however.

Date: 1980
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