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Institutional investors' holdings surrounding equity rights offerings

Author

Listed:
  • De Ridder, Adri
  • Burnie, David A.
  • Råsbrant, Jonas

Abstract

We examine shareholding surrounding Swedish rights offerings using detailed information on the ownership in firms. We analyze shareholding levels and their changes for domestic and foreign institutional investors. As institutional holdings change, domestic institutions increase their holdings more than foreign institutions. Our examination of low and high buying activities by institutional investors surrounding rights offerings shows no stock picking ability, thus not supporting the “smart-money hypothesis” (Gibson et al., 2004). We also find that investor domicile influences firm value following the offering. Overall, foreign investors exhibit a strong and opposite directional reaction to adverse selection costs than domestic investors.

Suggested Citation

  • De Ridder, Adri & Burnie, David A. & Råsbrant, Jonas, 2012. "Institutional investors' holdings surrounding equity rights offerings," Global Finance Journal, Elsevier, vol. 23(2), pages 125-140.
    • Handle: RePEc:eee:glofin:v:23:y:2012:i:2:p:125-140
    DOI: 10.1016/j.gfj.2012.06.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Equity offerings; Rights offerings; Institutional ownership; Domiciles;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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