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The calculation of returns during seasoned equity offers

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  • Seth Armitage

Abstract

The article analyses how the returns to a shareholder and the returns for an event study are calculated during the three types of seasoned equity offer (SEO) in use in the UK, namely rights issues, open offers and placings. The calculations differ across the two types of return and the three types of offer. Evidence from a sample of SEOs shows the large impact that the choice of calculation method has on returns. An unresolved question is whether to use discount-adjusted returns in event studies of placings.

Suggested Citation

  • Seth Armitage, 2012. "The calculation of returns during seasoned equity offers," The European Journal of Finance, Taylor & Francis Journals, vol. 18(5), pages 393-417, May.
    • Handle: RePEc:taf:eurjfi:v:18:y:2012:i:5:p:393-417
    DOI: 10.1080/1351847X.2011.601665
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    Cited by:

    1. Au Yong, Hue Hwa & Brown, Christine & Ho, Choy Yeing (Chloe) & Shekhar, Chander, 2024. "Equity in capital raising? Empirical evidence from structured private placements," Journal of Banking & Finance, Elsevier, vol. 159(C).
    2. Danbolt, Jo & Hirst, Ian & Jones, Edward, 2018. "Gaming the FTSE 100 index," The British Accounting Review, Elsevier, vol. 50(4), pages 364-378.
    3. Seth Armitage & Dionysia Dionysiou & Angelica Gonzalez, 2014. "Are the Discounts in Seasoned Equity Offers Due to Inelastic Demand?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 41(5-6), pages 743-772, June.
    4. Botta, Marco, 2019. "First-move advantage in seasoned equity offerings: Evidence from European banks," Global Finance Journal, Elsevier, vol. 41(C), pages 1-12.

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