Long-Term Performance Following Rights Issues and Open Offers in the UK

32 Pages Posted: 26 Dec 2005

See all articles by John C. Topuz

John C. Topuz

Southeastern Oklahoma State University

Ali F. Darrat

Louisiana Tech University - College of Business

Roger M. Shelor

Ohio University - College of Business

Date Written: 2006-05

Abstract

This study finds evidence of significant long-term underperformance following rights issues made during 1986-95 in the UK. The findings are resilient to a number of methodological controls. In contrast, our results for a smaller sample of open offers made during 1991-95 show strong positive performance over a 5-year post-issue period, implying that firms making open offers had better growth prospects than firms making rights issues. During 1986-90, a period when open offers were rarely used, firms appeared to be making rights issues to exploit overvaluation. However, this was not evident for rights issues made during 1991-95, a period when open offers were more commonly used.

Suggested Citation

Topuz, John C. and Darrat, Ali F. and Shelor (Deceased), Roger M., Long-Term Performance Following Rights Issues and Open Offers in the UK (2006-05). Journal of Business Finance & Accounting, Vol. 32, No. 9-10, pp. 1961-1994, November 2005, Available at SSRN: https://ssrn.com/abstract=857617 or http://dx.doi.org/10.1111/j.1468-5957.2006.00653.x

John C. Topuz

Southeastern Oklahoma State University ( email )

1405 N. 4th
Durant, OK 74701
United States

HOME PAGE: http://www.sosu.edu/bus/faculty.htm

Ali F. Darrat (Contact Author)

Louisiana Tech University - College of Business ( email )

Department of Economics & Finance
P.O. Box 10318
Ruston, LA 71272
United States
318-257-3874 (Phone)
318-257-4253 (Fax)

Roger M. Shelor (Deceased)

Ohio University - College of Business ( email )

640 Copeland
Athens, OH 45701

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