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The choice of SEO method in Korea: Rights vs. public offers

Ju Hyun Kim and Kyojik Song

Journal of Financial Markets, 2020, vol. 51, issue C

Abstract: Using South Korean data for 2000–2015, we find that firms with less information asymmetry and larger issue size are more likely to choose rights issues over public offerings and that control considerations also affect the flotation choice. We also find that rights offerings are met with more negative announcement returns than public offerings, and that stockholders of rights issuing firms seem to be compensated for the initial adverse market reaction by large issue-day returns. We contribute to the literature with an intra-market analysis of the SEO method choice, which cannot be done in markets with a dominant flotation type.

Keywords: Seasoned equity offerings; Flotation method; Rights issues; Public offers; Intra-market analysis (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.finmar.2020.100532

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