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Characteristics of Norwegian Rights Issues

Author

Listed:
  • Svein olav Krakstad

    (University of Stavanger)

  • Peter Molnar

    (Norwegian University of Science and Technology)

Abstract

In this paper we study Norwegian rights issues with focus on the announcement effects of raising seasoned equity. The abnormal returns at announcement in Norway are around −8% to −10% for rights issues, and this is much higher than what is found in other countries. The average book-to-market and debt-to-assets ratios are lower for companies that issue equity with other SEO types than with rights issues. This indicates that firms using rights issues are less able to time the equity issuance than the firms that use other SEO types. In addition, the listed rights lose on average around 30% of their value during the offer period.

Suggested Citation

  • Svein olav Krakstad & Peter Molnar, 2015. "Characteristics of Norwegian Rights Issues," Economics Bulletin, AccessEcon, vol. 35(1), pages 764-773.
    • Handle: RePEc:ebl:ecbull:eb-15-00195
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    References listed on IDEAS

    as
    1. Jean-François Gajewski & Edith Ginglinger, 2002. "Seasoned Equity Issues in a Closely Held Market: Evidence from France," Review of Finance, European Finance Association, vol. 6(3), pages 291-319.
    2. Cronqvist, Henrik & Nilsson, Mattias, 2005. "The choice between rights offerings and private equity placements," Journal of Financial Economics, Elsevier, vol. 78(2), pages 375-407, November.
    3. Sian Owen & Jo-Ann Suchard, 2008. "The pricing and impact of rights issues of equity in Australia," Applied Financial Economics, Taylor & Francis Journals, vol. 18(14), pages 1147-1160.
    4. Kang, Jun-Koo & Stulz, Rene M, 1996. "How Different Is Japanese Corporate Finance? An Investigation of the Information Content of New Security Issues," The Review of Financial Studies, Society for Financial Studies, vol. 9(1), pages 109-139.
    5. repec:dau:papers:123456789/1949 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    SEOs; Rights Issues; Announcement effects; Underpricing;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services

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