This study finds evidence of significant long-term underperformance following rights issues made during 1986-95 in the UK. The findings are resilient to a number of methodological controls. In contrast, our results for a smaller sample of open offers made during 1991-95 show strong positive performance over a 5-year post-issue period, implying that firms making open offers had better growth prospects than firms making rights issues. During 1986-90, a period when open offers were rarely used, firms appeared to be making rights issues to exploit overvaluation. However, this was not evident for rights issues made during 1991-95, a period when open offers were more commonly used.
- rights issues
- open offers
- long-term performance
- business finance
Ngatuni, P., Capstaff, J., & Marshall, A. (2007). Long term performance following rights issues and open offers in the UK. Journal of Business Finance and Accounting, 34(1-2), 33-64. https://doi.org/10.1111/j.1468-5957.2006.00653.x