TY - JOUR
T1 - Rights offerings, subscription period, shareholder takeup, and liquidity
AU - Balachandran, Balasingham
AU - Faff, Robert
AU - Theobald, Michael
AU - Van Zijl, Tony
PY - 2012/2
Y1 - 2012/2
N2 - 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 prices in this period. Higher shareholder takeup improves liquidity. We do find some evidence of inefficiencies in the adjustment process over the subscription period that, in part, is consistent with a model where markets are characterized by overconfident investors and that also articulates with takeup information arriving in the market.
AB - 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 prices in this period. Higher shareholder takeup improves liquidity. We do find some evidence of inefficiencies in the adjustment process over the subscription period that, in part, is consistent with a model where markets are characterized by overconfident investors and that also articulates with takeup information arriving in the market.
UR - http://www.scopus.com/inward/record.url?scp=84859969879&partnerID=8YFLogxK
U2 - 10.1017/S0022109011000573
DO - 10.1017/S0022109011000573
M3 - Article
AN - SCOPUS:84859969879
SN - 0022-1090
VL - 47
SP - 213
EP - 239
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
IS - 1
ER -