The Long Run Performance of UK Firms Making Multiple Rights Issues

Posted: 29 Nov 2014

See all articles by Abdullah Iqbal

Abdullah Iqbal

University of Kent, Canterbury

Saeed Akbar

University of Liverpool - Accounting and Finance Division

Radha K. Shiwakoti

University of Kent - Canterbury Business School

Date Written: March 18, 2013

Abstract

This study examines the long run performance of firms offering multiple rights issues in the UK and differentiates between one-time and multiple issuers. By analysing a sample of 1146 rights issues offered by 788 London Stock Exchange listed industrial companies between 1988 and 2008, this study reports that firms making multiple rights issues do not experience significant long run underperformance following the third or subsequent issues. However, the one-time rights issuers do experience underperformance during the sample period. The findings of this study thus imply that those firms which are making multiple rights issues are of better quality and investors could avoid loses by investing in firms which had made more than one rights issue in the past. The results also suggest that researchers which are intending to examine the long run post-event performance of firms should control the incidence of similar events that had happened in previous years.

Keywords: Rights issues, Operating performance, Returns, Sequence in equity issues, Seasoned equity offerings, Multiple rights issues

JEL Classification: G14, G30

Suggested Citation

Iqbal, Abdullah and Akbar, Saeed and Shiwakoti, Radha K., The Long Run Performance of UK Firms Making Multiple Rights Issues (March 18, 2013). International Review of Financial Analysis, Vol. 28, No. June, 2013, Available at SSRN: https://ssrn.com/abstract=2531449

Abdullah Iqbal (Contact Author)

University of Kent, Canterbury ( email )

Canterbury, Kent CT2 7PE
United Kingdom

Saeed Akbar

University of Liverpool - Accounting and Finance Division ( email )

United Kingdom

Radha K. Shiwakoti

University of Kent - Canterbury Business School ( email )

Canterbury, Kent CT2 7NZ
United Kingdom

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