Normal view MARC view

Rights issues for companies with dual-class shares

Author: Hietala, Pekka ; Löyttyniemi, TimoINSEAD Area: FinanceIn: European equity markets and corporate financial decisions by John Doukas and Ike Mathur; International Business Press, 1993 Language: EnglishDescription: p. 103-124.Type of document: INSEAD ChapterNote: Please ask the Library for this chapter.Abstract: This essay examines the pricing of rights issues for companies wich have both superior and limited voting power shares. it focuses on the setting of the subscription prices at both the theoretical and the empirical level. The main result of the essay is that subscription prices for superior and limited voting power shares should be set in relation to their market prices, to avoid any wealth transfers between different shareholder groups. Deviations from this neutral pricing should be seen in relative returns between these share series after share issue announcement. Using data from Finland, we found that subscription prices were set relative to the market prices in 1975-1988. The deviations from this were so small that we could not detect any cross-sectional effects of share issue announcements that could be explained by the model. It is evident that companies price rights issues so that any relative valuation effects are avoided
Tags: No tags from this library for this title. Add tag(s)
Log in to add tags.
Item type Current location Collection Call number Status Date due
INSEAD Chapter Digital Library
PDF Available

Please ask the Library for this chapter.

This essay examines the pricing of rights issues for companies wich have both superior and limited voting power shares. it focuses on the setting of the subscription prices at both the theoretical and the empirical level. The main result of the essay is that subscription prices for superior and limited voting power shares should be set in relation to their market prices, to avoid any wealth transfers between different shareholder groups. Deviations from this neutral pricing should be seen in relative returns between these share series after share issue announcement. Using data from Finland, we found that subscription prices were set relative to the market prices in 1975-1988. The deviations from this were so small that we could not detect any cross-sectional effects of share issue announcements that could be explained by the model. It is evident that companies price rights issues so that any relative valuation effects are avoided

Digitized

There are no comments for this item.

Log in to your account to post a comment.
Koha 3.18 - INSEAD Library Catalogue
Library Home | Contact Us | What's Koha?