Seasoned Equity Issues in a Closely Held Market: Evidence from France

Posted: 23 Sep 2002

See all articles by Jean-Francois Gajewski

Jean-Francois Gajewski

University Savoie Mont-Blanc, IREGE

Edith Ginglinger

Université Paris-Dauphine, PSL Research University

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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 using the relatively expensive public offering method. We show that the market reaction to the announcement of seasoned equity issues is significantly negative for rights issues and insignificantly negative for public offerings. Our results suggest that the adverse selection effect is greater for rights issues than for public offerings, due to stronger underwriter certification for the public offerings. We find that the share price effect is positively related to blockholders take-up renouncements for firms with prior concentrated ownership. For these firms, the favourable ownership dispersion effect offsets the adverse selection effect.

Keywords: seasoned equity issues, flotation methods, ownership structure

JEL Classification: G32, G14, D80

Suggested Citation

Gajewski, Jean-Francois and Ginglinger, Edith, Seasoned Equity Issues in a Closely Held Market: Evidence from France. European Finance Review, Vol. 6, No. 3, 2002. Available at SSRN: https://ssrn.com/abstract=315971

Jean-Francois Gajewski

University Savoie Mont-Blanc, IREGE ( email )

4 Chemin de Bellevue
BP 80439
Annecy-le-Vieux, 74944
France
33 6 10 32 71 06 (Phone)
33 4 50 09 24 39 (Fax)

HOME PAGE: http://www.univ-savoie.fr/

Edith Ginglinger (Contact Author)

Université Paris-Dauphine, PSL Research University ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775
France

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