Which Investors Leave Money on the Table? Evidence from Rights Issues

Posted: 27 Oct 2008

See all articles by Elias Henrikki Rantapuska

Elias Henrikki Rantapuska

Aalto University

Samuli Knüpfer

BI Norwegian Business School; Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 2 versions of this paper

Date Written: 2008

Abstract

This study documents patterns of investor behavior around Finnish rights issues. We find that shareholders of issuing companies lost at least ¬9.9 million in aggregate from 1995 to 2002 by exercising rights too early, selling rights in the open market below their intrinsic value, or leaving rights unexercised. At the investor level, the losses are modest. For example, the median household investor suffered a loss of ¬135 from not exercising or selling the rights. Investors with small portfolios, inactive trading history, those who know neither of the official languages in Finland, or who are living abroad leave money on the table the most.

Keywords: G32, D01

Suggested Citation

Rantapuska, Elias Henrikki and Knüpfer, Samuli, Which Investors Leave Money on the Table? Evidence from Rights Issues (2008). Review of Finance, Vol. 12, Issue 4, pp. 701-733, 2008. Available at SSRN: https://ssrn.com/abstract=1289761 or http://dx.doi.org/rfn018

Elias Henrikki Rantapuska

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

Samuli Knüpfer

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

HOME PAGE: http://www.samuliknupfer.com

Research Institute of Industrial Economics (IFN)

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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