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- Title
THE PRICE EFFECTS OF RIGHTS OFFERINGS.
- Authors
White, R. W.; Lusztig, P. A.
- Abstract
The purpose of this paper has been to test empirically two hypotheses with respect to the price effects of rights offerings. Its importance for the normative theory of financial management is obvious. The technique used was a pooled cross-section time-series model. This approach permitted the abstraction from the components of returns attributable to market-wide events and other firm-specific events on or near the date of interest, as well as tests of significance of events on market prices. The results of the pooled regressions provide more definitive information on the price behavior associated with the announcement of a rights offering. Since the t-statistics13 on the announcement date dummy variables were statistically significant at the 1 percent level or better, the hypothesis that on average investors believe that there is negative information associated with a rights offering cannot be rejected14
- Subjects
PRICES of securities; STOCK prices; RATE of return; EFFICIENT market theory; TIME series analysis; INSTRUMENTAL variables (Statistics); RIGHTS offerings
- Publication
Journal of Financial & Quantitative Analysis, 1980, Vol 15, Issue 1, p25
- ISSN
0022-1090
- Publication type
Article
- DOI
10.2307/2979017