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- Title
Rights Offerings and Corporate Financial Condition.
- Authors
Ursel, Nancy D.
- Abstract
Certain American industrial firms still use equity rights offerings. Most of these offerings are uninsured. I examine firms' financing decisions, and develop the explanation that rights offerings are used by firms in financial distress with difficulty accessing underwriting services. These firms have little to lose from the costs of adverse selection that accompany the lack of underwriter certification of uninsured rights offerings. Probit analysis of 660 seasoned NYSE, Amex, and Nasdaq equity issues between 1983-1999 yields results consistent with my explanation. There is no evidence that variables previously linked to rights usage (e.g..ownership concentration) continue to be relevant to the issue method choice.
- Subjects
UNITED States; STOCKHOLDERS; PRICES of securities; CORPORATE finance; RIGHTS offerings; INSURANCE; STOCK exchanges; NASDAQ Stock Market; NEW York Stock Exchange; AMERICAN Stock Exchange
- Publication
Financial Management (Wiley-Blackwell), 2006, Vol 35, Issue 1, p31
- ISSN
0046-3892
- Publication type
Article
- DOI
10.1111/j.1755-053X.2006.tb00130.x