Seasoned Equity Issues in a Closely Held Market: Evidence from France |
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Authors: | Jean-Franç ois Gajewski Edith Ginglinger |
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Affiliation: | (1) Graduate School of Business, University of Paris-XII (, 80 avenue du Général de Gaulle, 94000 Créteil, France;(2) CEREG, place du Marechal de Lattre, University Paris-Dauphine, 75775 Paris Cedex 16, France |
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Abstract: | This paper examines seasoned equity offerings in France.Even though a rights offering is the primary flotation method, French companies are increasingly usingthe relatively expensive public offering method. We show that the market reaction to the announcementof seasoned equity issues is significantly negative for rights issues and insignificantly negative forpublic offerings. Our results suggest that the adverse selection effect is greater for rights issues thanfor public offerings, due to stronger underwriter certification for the public offerings. We find that theshare price effect is positively related to blockholders take-up renouncements for firms with priorconcentrated ownership. For these firms, the favourable ownership dispersion effect offsets the adverse selection effect. |
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Keywords: | seasoned equity issues flotation methods ownership structure |
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