Rights offerings, takeup, renounceability, and underwriting status

B Balachandran, R Faff, Michael Theobald

    Research output: Contribution to journalArticle

    36 Citations (Scopus)


    Rights offerings in Australia provide valuable choices to the issuer in terms of both underwriting and renounceability. We formulate a set of hypotheses from a quality signaling perspective, affording an analysis of the key interrelations between quality, underwriting status, renounceability, takeup, and subscription price discount. We analyse rights offerings from two perspectives: market reaction to rights announcements and identification of the factors driving the choice of issue type. Evidence strongly supports the relation between quality signals and issue type. Using a robustly constructed takeup variable, we establish empirical relations between takeup, underwriting status, and renounceability that differ significantly from those previously reported, but which are consistent with the hypotheses developed in this paper. (C) 2008 Elsevier B.V. All rights reserved.
    Original languageEnglish
    Pages (from-to)328-346
    Number of pages19
    JournalJournal of Financial Economics
    Issue number2
    Publication statusPublished - 1 Aug 2008


    • ownership concentration
    • underwriting
    • takeup
    • renounceability
    • rights offerings


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