The Issuance of Units in Rights Offerings: Agency Costs and Signaling
La Trobe University - Department of Finance; Financial Research Network (FIRN)
Deakin University - School of Accounting, Economics and Finance
University of Southern Queensland
University of Birmingham - Department of Accounting and Finance
University 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
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, G32working papers series
Date posted: July 19, 2010 ; Last revised: June 22, 2013
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