TY - JOUR
T1 - Rights offerings, takeup, renounceability, and underwriting status
AU - Balachandran, Bala
AU - Faff, Robert
AU - Theobald, Michael Francis
N1 - Funding Information:
We gratefully acknowledge the helpful comments and suggestions of the anonymous referee and helpful suggestions of G. William Schwert (the editor). This paper has been benefited from suggestions by Sugato Chakravarty, Keryn Chalmers, Charles Corrado, David Feldman, Raymond Liu, Alastair Marsden, Peter Pham, Michael Skully, Peter Swan, and seminar participants at Monash University and the University of New South Wales. We also gratefully acknowledge the research assistance provided by Tuan Anh Nguyen, Eswaran Velayutham, Hanghang Tu, Berty Vidanapathirana, Vineet Tawani, and Ke Xu and the funding provided by an Australian Research Council Discovery Grant (DP0664368).
PY - 2008/8
Y1 - 2008/8
N2 - Rights offerings in Australia provide valuable choices to the issuer in terms of both underwriting and renounceability. We formulate a set of hypotheses from a quality-signaling perspective, affording an analysis of the key interrelations between quality, underwriting status, renounceability, takeup, and subscription price discount. We analyse rights offerings from two perspectives: market reaction to rights announcements and identification of the factors driving the choice of issue type. Evidence strongly supports the relation between quality signals and issue type. Using a robustly constructed takeup variable, we establish empirical relations between takeup, underwriting status, and renounceability that differ significantly from those previously reported, but which are consistent with the hypotheses developed in this paper.
AB - Rights offerings in Australia provide valuable choices to the issuer in terms of both underwriting and renounceability. We formulate a set of hypotheses from a quality-signaling perspective, affording an analysis of the key interrelations between quality, underwriting status, renounceability, takeup, and subscription price discount. We analyse rights offerings from two perspectives: market reaction to rights announcements and identification of the factors driving the choice of issue type. Evidence strongly supports the relation between quality signals and issue type. Using a robustly constructed takeup variable, we establish empirical relations between takeup, underwriting status, and renounceability that differ significantly from those previously reported, but which are consistent with the hypotheses developed in this paper.
KW - Ownership concentration
KW - Renounceability
KW - Rights offerings
KW - Takeup
KW - Underwriting
UR - http://www.scopus.com/inward/record.url?scp=50249131850&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2007.11.001
DO - 10.1016/j.jfineco.2007.11.001
M3 - Article
SN - 0304-405X
VL - 89
SP - 328
EP - 346
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 2
ER -