Institutional investors' holdings surrounding equity rights offerings |
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Authors: | Adri De Ridder David A Burnie Jonas Råsbrant |
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Institution: | 1. Gotland University, SE-621 67 Visby, Sweden;2. Haworth College of Business, Western Michigan University, Kalamazoo, MI, USA;3. KTH Royal Institute of Technology, SE-100 44 Stockholm, Sweden |
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Abstract: | We examine shareholding surrounding Swedish rights offerings using detailed information on the ownership in firms. We analyze shareholding levels and their changes for domestic and foreign institutional investors. As institutional holdings change, domestic institutions increase their holdings more than foreign institutions. Our examination of low and high buying activities by institutional investors surrounding rights offerings shows no stock picking ability, thus not supporting the “smart-money hypothesis” (Gibson et al., 2004). We also find that investor domicile influences firm value following the offering. Overall, foreign investors exhibit a strong and opposite directional reaction to adverse selection costs than domestic investors. |
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