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- Title
Motivation and Performance of Seasoned Offerings by Closed-End Funds.
- Authors
Akhigbe, Aigbe; Madura, Jeff
- Abstract
We examine the motivation and performance of closed-end funds that engage in seasoned public or rights offerings. We find that closed-end funds are more motivated to engage in seasoned offerings when their shares exhibit a relatively high premium (compared to their corresponding NAV) and have a high degree of liquidity. We also find a significant negative valuation effect on average in response to seasoned offerings by closed-end funds. Our cross-sectional analysis reveals that the valuation effect at the time of the seasoned offering is more unfavorable for funds that have relatively high expense ratios and are relatively large. Furthermore, we find that the closed-end funds experience significant negative valuation effects over the three-year period subsequent to the seasoned offering, implying poor post-offering performance.
- Subjects
CLOSED-end funds; GOING public (Securities); RIGHTS offerings
- Publication
Financial Review, 2001, Vol 36, Issue 3, p101
- ISSN
0732-8516
- Publication type
Article
- DOI
10.1111/j.1540-6288.2001.tb00022.x