Seasoned Equity Issues in a Closely Held Market: Evidence from France |
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Authors: | Gajewski Jean-Francois; Ginglinger Edith |
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Institution: | University of Paris-XII (Graduate School of Business) La Pyramide, 80 avenue du Général de Gaulle, 94000 Créteil, France E-mail: gajewski{at}univ-paris12.fr
University Paris-Dauphine CEREG, place du Marechal de Lattre, 75775 Paris Cedex 16, France E-mail: edith.ginglinger{at}dauphine.fr |
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Abstract: | This paper examines seasoned equity offerings in France. Eventhough a rights offering is the primary flotation method, Frenchcompanies are increasingly using the relatively expensive publicoffering method. We show that the market reaction to the announcementof seasoned equity issues is significantly negative for rightsissues and insignificantly negative for public offerings. Ourresults suggest that the adverse selection effect is greaterfor rights issues than for public offerings, due to strongerunderwriter certification for the public offerings. We findthat the share price effect is positively related to blockholderstake-up renouncements for firms with prior concentrated ownership.For these firms, the favourable ownership dispersion effectoffsets the adverse selection effect. JEL Classification: G32,G14 and D80. |
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Keywords: | seasoned equity issues flotation methods ownership structure |
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