Rights offerings, subscription period, shareholder takeup and liquidity

B Balachandran, Robert Faff, M Theobald, T Van Zijl

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

We examine the role of shareholder takeup in rights offerings on the subscription period price reaction and liquidity. Our results indicate that takeup information is reflected in price adjustments over the subscription period and that quality-related information disclosed on the rights announcement date further impacts upon prices in this period. Higher shareholder takeup improves liquidity. We do find some evidence of inefficiencies in the adjustment process over the subscription period which, in part, is consistent with a model where markets are characterized by overconfident investors and which also articulates with takeup information arriving in the market.
LanguageEnglish
Pages213-239
Number of pages27
JournalJournal of Financial and Quantitative Analysis
Volume47
Issue number1
DOIs
Publication statusPublished - Feb 2012

Fingerprint

Subscription
Shareholders
Rights offerings
Liquidity
Adjustment process
Inefficiency
Investors
Price adjustment
Announcement
Market model
Price reaction
Price impact

Keywords

  • rights offerings
  • shareholders
  • liquidity
  • Australia

Cite this

Balachandran, B ; Faff, Robert ; Theobald, M ; Van Zijl, T. / Rights offerings, subscription period, shareholder takeup and liquidity. In: Journal of Financial and Quantitative Analysis . 2012 ; Vol. 47, No. 1. pp. 213-239.
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Rights offerings, subscription period, shareholder takeup and liquidity. / Balachandran, B; Faff, Robert; Theobald, M; Van Zijl, T.

In: Journal of Financial and Quantitative Analysis , Vol. 47, No. 1, 02.2012, p. 213-239.

Research output: Contribution to journalArticle

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