 Evidence on the determinants of equity issue method in the UKBruce Burton and D. M. Power Applied Financial Economics, 2003, vol. 13, issue 2, 145-157 Abstract: Eckbo and Masulis (1992), Burton et al. (1999) and Armitage (1999) reported that the method used to issue new shares is one of the key determinants of the market reaction to seasoned equity offer announcements. This article develops this earlier line of research by examining a sample of 193 rights issues and 329 placings of shares made by UK firms between 1995 and 1996. It (i) details the relative popularity of rights and placings amongst London-quoted firms; (ii) compares the characteristics of the equity issues made under the different methods; (iii) examines variations in the attributes of firms which place their shares or offer them to existing investors via a rights issue and; (iv) uses logit analysis to investigate whether the determinants of offer method choice can be modelled accurately. A holdout sample of 59 placings and 29 rights issues is employed to examine the predictive ability of the logit model results. The evidence suggests that identifiable differences exist in both the size of the issue and the characteristics of the issuer, but that these differences provide only limited ability to predict equity issue methods accurately. Date: 2003 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:apfiec:v:13:y:2003:i:2:p:145-157 Ordering information: This journal article can be ordered from DOI: 10.1080/09603100110108127 Access Statistics for this article Applied Financial Economics is currently edited by Anita Phillips More articles in Applied Financial Economics from Taylor & Francis Journals |
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