The Demise of the Rights Issue
Year: 1988
Type: article
Abstract: This article suggests that the lack of use of rights offerings in the United States, a phenomenon referred to as the equity underwriting paradox, can be explained by transaction-cost conditions. A sample of underwritten rights offerings provides support for the explanation. Firms making underwritten rights offerings paid lower underwriter fees but incurred significantly larger price drops just prior to the offering than did firms making underwritten public offerings. Further analysis reveals that the underwritten-rights-offering price concessions are a form of transaction cost that is not found in under-written public offerings.
Source: Review of Financial Studies
DOI: 10.1093/rfs/1.3.289
Author: Robert S. Hansen
Institutions: Tulane University, University of Michigan
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1968479420