Institutional investors' holdings surrounding equity rights offerings

Adri De Ridder, David A. Burnie and Jonas Råsbrant

Global Finance Journal, 2012, vol. 23, issue 2, 125-140

Abstract: We examine shareholding surrounding Swedish rights offerings using detailed information on the ownership in firms. We analyze shareholding levels and their changes for domestic and foreign institutional investors. As institutional holdings change, domestic institutions increase their holdings more than foreign institutions. Our examination of low and high buying activities by institutional investors surrounding rights offerings shows no stock picking ability, thus not supporting the “smart-money hypothesis” (Gibson et al., 2004). We also find that investor domicile influences firm value following the offering. Overall, foreign investors exhibit a strong and opposite directional reaction to adverse selection costs than domestic investors.

Keywords: Equity offerings; Rights offerings; Institutional ownership; Domiciles (search for similar items in EconPapers)
JEL-codes: G14 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:23:y:2012:i:2:p:125-140

DOI: 10.1016/j.gfj.2012.06.002

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