The Pricing of French Unit Seasoned Equity Offerings

Chollet, Pierre; Ginglinger, Édith

doi:10.1111/1468-036x.00143

Cited by 13 publications

(8 citation statements)

References 22 publications

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“…11 One or more of these measures has been used in prior studies (e.g. Blackwell et al, 1990;Denis, 1991;Chollet and Ginglinger, 2001;Bühner and Kaserer, 2002;Wu, 2004;Bethel and Krigman, 2008). Table 3 Descriptive statistics of issuer and offering characteristics This table reports descriptive statistics for common stock private placements and special warrants segmented by the time period.…”

Section: Descriptive Statisticsmentioning

confidence: 99%

The Wealth Effects of Reducing Private Placement Resale Restrictions

Maynes¹,

Pandes²

2010

Euro Fin Management

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Recently, the US Securities and Exchange Commission reduced resale restrictions on Rule 144 private placements from 12 months to 6 months with the intention of lowering the cost of equity capital for issuing firms. In Canada, similar regulatory changes were adopted several years ago, providing a unique opportunity to test the wealth effects of reducing private placement resale restrictions. We find that shortening resale restrictions reduces the liquidity portion of offer price discounts, and thus lowers the cost of equity capital for issuing firms, but has no significant effect on announcement-period abnormal returns after controlling for issuer type. However, there is a fundamental shift in the types of firms making private placements of common stock after the legislation-induced easing of resale restrictions. Specifically, we find that smaller firms and firms with greater information asymmetry are less likely to issue privately placed common stock after the legislative change, suggesting that the easing of resale restrictions reduces the We are grateful to an anonymous referee and the Managing Editor, John Doukas, for their valuable comments and suggestions. We thank Douglas Cumming, B. Espen Eckbo, Debarshi Nandy, Pauline Shum and Ed Waitzer for very useful feedback on earlier versions of this paper. Comments and suggestions from conference participants at the 501 costly signal that helps to overcome the Myers and Majluf (1984) underinvestment problem.

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Section: Descriptive Statisticsmentioning

confidence: 99%

The Wealth Effects of Reducing Private Placement Resale Restrictions

Maynes¹,

Pandes²

2010

Euro Fin Management

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“…In contrast to the United States, where SEOs are public offerings underwritten through a firm commitment contract, in Greece, as in many European countries the standard method of increasing share capital is by an equity rights issue (Stehle et al, 2000;Chollet and Ginglinger, 2001;Jeanneret, 2005). For firms listed in the ASE an equity issue through rights offering is decided during a company's general meeting.…”

Section: Seasoned Equity Offerings In the Asementioning

confidence: 99%

SEOs in a ‘Hot Market’: evidence of timing

Cohen

Papadaki

Siougle

2007

Applied Financial Economics

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This study analyses the financing decision of raising equity through a rights issue in a developing market, the Athens Stock Exchange (ASE), during a particular emerging period. Specifically, this study examines the information content of accounting items derived from published financial statements the year prior to a 'hot' period in explaining post-issue stock price performance. We are using data from listed companies in the ASE during the 'hot period' of year 1999 when stock prices burst and an unusual large number of seasoned equity offerings (SEOs) took place. Our empirical results do not verify a statistically significant relationship between discretionary accruals in the year preceding the issue and postissue stock returns. Moreover, historical accounting items do not provide value relevant information and cannot be used to explain post-issue stock returns. Market trend prior to the issuing is proved to be the only significant variable in explaining post SEO returns. The overall findings are in line with the market timing theory which claims that managers just time their equity issues in an upward moving market in order to increase the offering proceeds.

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“…The optional part of the unit makes it more difficult to value or, in other words, easier to underprice. Therefore, the association of units with cash offerings becomes particularly attractive only from 1991 on; see Chollet and Ginglinger (2001) for an extensive discussion of French units offerings. These legal features have as a consequence that the rights offerings of common stocks are the predominant equity raising operations during the 1980s and the 1990s.…”

Section: The French Institutional Settingmentioning

confidence: 99%

Use of the Proceeds and Long-term Performance of French SEO Firms

Jeanneret

2005

Eur Financial Management

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"This paper examines the long-term stock performance of French SEO with rights by looking at the intended use of the proceeds. Firms that raise equity for pure capital structure motives are separated from the ones that use the SEO proceeds to finance specific investment projects. Issuers in the first category are concerned about preserving their financial flexibility and they are expected to evolve in a capital structure irrelevancy framework. On the other hand, issuers in the second category are more inclined to be sensitive to adverse selection problems or agency conflicts and thus, they should be more exposed to under-reaction on the long-run. According to a matching firm methodology, 'Financing New Investment' issuers underperform their benchmark at a rate of 4% to 8% per year over a 36-month horizon while 'Capital Structure' issuers do not show any abnormal performance. These results are robust according to alternative Beta pricing models. In addition, managers of both issuer's types time the SEO after a period of positive abnormal performance in order to sell overpriced securities. However, only the 'Financing New Investment' sample experiences a performance reversal; the abnormal returns decreasing gradually from the issue on, to become significantly negative 24 months after the event." Copyright Blackwell Publishers Ltd, 2005.

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The Pricing of French Unit Seasoned Equity Offerings

Cited by 13 publications

References 22 publications

The Wealth Effects of Reducing Private Placement Resale Restrictions

The Wealth Effects of Reducing Private Placement Resale Restrictions

SEOs in a ‘Hot Market’: evidence of timing

Use of the Proceeds and Long-term Performance of French SEO Firms

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