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The choice of SEO method in Korea: Rights vs. public offers

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  • Kim, Ju Hyun
  • Song, Kyojik

Abstract

Using South Korean data for 2000–2015, we find that firms with less information asymmetry and larger issue size are more likely to choose rights issues over public offerings and that control considerations also affect the flotation choice. We also find that rights offerings are met with more negative announcement returns than public offerings, and that stockholders of rights issuing firms seem to be compensated for the initial adverse market reaction by large issue-day returns. We contribute to the literature with an intra-market analysis of the SEO method choice, which cannot be done in markets with a dominant flotation type.

Suggested Citation

  • Kim, Ju Hyun & Song, Kyojik, 2020. "The choice of SEO method in Korea: Rights vs. public offers," Journal of Financial Markets, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finmar:v:51:y:2020:i:c:s138641812030001x
    DOI: 10.1016/j.finmar.2020.100532
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    References listed on IDEAS

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    Cited by:

    1. Isiker, Murat & Tas, Oktay, 2021. "Does leverage level matter for return anomaly during rights issue announcements? The case of Islamic countries," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 28, pages 141-155.
    2. Richard Arhinful & Mehrshad Radmehr, 2023. "The Impact of Financial Leverage on the Financial Performance of the Firms Listed on the Tokyo Stock Exchange," SAGE Open, , vol. 13(4), pages 21582440231, November.
    3. Gao, Xuechen & Hsu, Yuan-Teng & Wang, Xuewu (Wesley) & Yuan, Weici, 2022. "The choice of flotation methods: Evidence from Chinese seasoned equity offerings," Journal of International Money and Finance, Elsevier, vol. 129(C).
    4. Heejung Choi & Jungwon Suh, 2023. "The role of parent firms in business groups’ internal capital markets," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(3-4), pages 820-857, March.

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    More about this item

    Keywords

    Seasoned equity offerings; Flotation method; Rights issues; Public offers; Intra-market analysis;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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