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The Issuance of Units in Rights Offerings: Agency Costs and SignalingBalasingham BalachandranLa Trobe University - Department of Finance; Financial Research Network (FIRN) Sutharson KanapathipillaiDeakin University - School of Accounting, Economics and Finance Chandrasekhar KrishnamurtiUniversity of Southern Queensland Michael TheobaldUniversity of Birmingham - Department of Accounting and Finance Eswaran VelayuthamUniversity of Southern Queensland; La Trobe University - Graduate School of Management February 8, 2012 Australian Centre for Financial Studies - Finsia Banking and Finance Conference 2010 2013 Financial Markets & Corporate Governance Conference Abstract: We examine the determinants of the issuance of units in rights offerings. We find that firms with higher agency costs, in particular, smaller firms with lower managerial ownership, lesser board independence and lower ownership concentrations issue units as a package of equity with warrants. We also find that firms incorporate quality signals in designing unit features, in particular, firms with higher risk tend to use larger degrees of underpricing and raise larger proportions of funds by exercising warrants.
Number of Pages in PDF File: 22 Keywords: Issuance choice, rights offerings, unit offerings, warrants, equity, agency cost, signaling, Australia JEL Classification: G14, G32 working papers seriesDate posted: July 19, 2010 ; Last revised: February 17, 2013Suggested CitationContact Information
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