Picture of two heads

Open Access research that challenges the mind...

The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including those from the School of Psychological Sciences & Health - but also papers by researchers based within the Faculties of Science, Engineering, Humanities & Social Sciences, and from the Strathclyde Business School.

Discover more...

Rights offerings, subscription period, shareholder takeup and liquidity

Balachandran, B and Faff, Robert and Theobald, M and Van Zijl, T (2012) Rights offerings, subscription period, shareholder takeup and liquidity. Journal of Financial and Quantitative Analysis, 47 (1). pp. 213-239. ISSN 0022-1090

Full text not available in this repository. (Request a copy from the Strathclyde author)

Abstract

We examine the role of shareholder takeup in rights offerings on the subscription period price reaction and liquidity. Our results indicate that takeup information is reflected in price adjustments over the subscription period and that quality-related information disclosed on the rights announcement date further impacts upon prices in this period. Higher shareholder takeup improves liquidity. We do find some evidence of inefficiencies in the adjustment process over the subscription period which, in part, is consistent with a model where markets are characterized by overconfident investors and which also articulates with takeup information arriving in the market.