Long Term Performance Following Rights Issues and Open Offers in the UK

52 Pages Posted: 6 Jul 2006

See all articles by Proches Ngatuni

Proches Ngatuni

Open University of Tanzania

John Capstaff

University of Strathclyde - Strathclyde Business School

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School

Multiple version iconThere are 2 versions of this paper

Abstract

This study finds evidence of significant long-term underperformance following rights issues made during 1986-95 in the UK. The findings are resilient to a number of methodological controls. In contrast, our results for a smaller sample of open offers made during 1991-95 show strong positive performance over a 5-year post-issue period, implying that firms making open offers had better growth prospects than firms making rights issues. During 1986-90, a period when open offers were rarely used, firms appeared to be making rights issues to exploit overvaluation. However, this was not evident for rights issues made during 1991-95, a period when open offers were more commonly used.

Keywords: Rights issues, open offers, long term performance

JEL Classification: G14, G32

Suggested Citation

Ngatuni, Proches and Capstaff, John and Marshall, Andrew P., Long Term Performance Following Rights Issues and Open Offers in the UK. Journal of Business Finance & Accounting, Forthcoming. Available at SSRN: https://ssrn.com/abstract=912406

Proches Ngatuni

Open University of Tanzania ( email )

Faculty of Business Management
P. O. Box 34705
Dar es Salaam
Tanzania
+255-22-266-6659 (Phone)
+255-22-266-8759 (Fax)

HOME PAGE: http://www.openuniversity.ac.tz

John Capstaff (Contact Author)

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
0141 5483890 (Phone)
0141 5523547 (Fax)

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 548 3894 (Phone)

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