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Choices in Equity Finance A Global Perspective

Groen-Xu, Moqi, Massimo Massa, Virginie Mataigne and Theo Vermaelen

No 11987, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Equity issues can be structured as cash or rights offers and depending on the country's legislation firms can allow or restrict tradability of the rights. We study these choices using a worldwide sample of equity issues announced in 127 countries. We consider whether these choices as well as the short and long-term stock returns can be explained by a number of hypotheses proposed in the literature. The empirical findings confirm that the issuing method is driven by adverse selection and financial distress concerns, while the tradability decision reflects execution risk as well as transactions costs.

Keywords: liquidity of rights; rights issue; seasoned equity offer (search for similar items in EconPapers)
JEL-codes: G14 G32 G38 K22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2017-04
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