2021
DOI: 10.1108/mf-01-2021-0023
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Choice between rights issue and private placements of equity and the role of information asymmetry

Abstract: PurposeThe objective of this paper is to investigate the role of information asymmetry in the equity selling mechanisms chosen by the firms from an important emerging market, India. Specifically, the authors look into the choice between the two most popular mechanisms of equity issues – rights issue and private placement of equity.Design/methodology/approachThis study introduces three analyst specific variables as proxies of information asymmetry as the conventional proxies are fraught with several disadvantag… Show more

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Cited by 1 publication
(2 citation statements)
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“…The literature on equity offerings that explores the company's decision to choose an equity offering mechanism states that two mechanisms are popular in general, namely, right issue and private placement (Cronqvist and Nilsson, 2005;Dewa and Ibrahim, 2010;Erel et al, 2012;Sony et al, 2020). Previous researchers argue that information asymmetry affects the decision of the type of company's equity offering method.…”
Section: Figure 1 the Role Of Information And Other Influencing Facto...mentioning
confidence: 99%
See 1 more Smart Citation
“…The literature on equity offerings that explores the company's decision to choose an equity offering mechanism states that two mechanisms are popular in general, namely, right issue and private placement (Cronqvist and Nilsson, 2005;Dewa and Ibrahim, 2010;Erel et al, 2012;Sony et al, 2020). Previous researchers argue that information asymmetry affects the decision of the type of company's equity offering method.…”
Section: Figure 1 the Role Of Information And Other Influencing Facto...mentioning
confidence: 99%
“…Several studies examine equity offerings and discuss the factors that determine the type of offering. These studies provide very varied empirical evidence regarding information asymmetry as an essential factor in securities offering decisions (Banerjee and Deb, 2015;Hertzel and Smith, 1993;Lim et al, 2021;Sony et al, 2020;Wu, 2004;Yeh et al, 2020).…”
Section: Introductionmentioning
confidence: 99%