Market Reaction Implications of the Composition of SEO Packages on the Tel Aviv Stock Exchange

Sagi Akron

Emerging Markets Finance and Trade, 2013, vol. 49, issue S1, 77-93

Abstract: In this paper, the author examines the implications of the composition of the Tel Aviv Stock Exchange's different seasoned equity offering (SEO) packages on the market reaction to the SEO announcements. The 2000-2010 analysis demonstrates the significant impact of the SEO package's composition on the reaction to SEO announcements. It appears that the most negative impact of stock options in the package is alleviated by inclusion of a rights issue. The author concludes that package composition conveys an important signal to investors. Because they are perceived as a diminished threat to the existing ownership's balance of power, rights issues may alleviate asymmetric information agencies.

Keywords: offering package composition; seasoned equity offerings (search for similar items in EconPapers)
Date: 2013
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