Long-run performance of Spanish seasoned equity issues with rights

This paper analyzes the long-run effect on shareholders' wealth and firms' operating performance of the right offering decision in Spain. The evidence shows that the stock price of firms' issuing rights substantially underperform the different benchmarks employed. It has also been obs...

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Bibliographic Details
Published inInternational review of financial analysis Vol. 13; no. 2; pp. 191 - 215
Main Authors Pastor-Llorca, Marı́a Jesús, Martı́n-Ugedo, Juan Francisco
Format Journal Article
LanguageEnglish
Published Greenwich Elsevier Inc 2004
Elsevier
Elsevier Science Ltd
SeriesInternational Review of Financial Analysis
Subjects
Equity issues
Long term
Long-run performance
Market efficiency
Mathematical models
Rates of return
Rights issues
Statistical analysis
Stock offerings
Stock prices
Studies
Spain
Rights issues
Long-run performance
G32
G12
Equity issues
Market efficiency
G14
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Summary:This paper analyzes the long-run effect on shareholders' wealth and firms' operating performance of the right offering decision in Spain. The evidence shows that the stock price of firms' issuing rights substantially underperform the different benchmarks employed. It has also been observed that these companies experience a decrease in accounting profitability for some pre- to postissue periods. An excessive optimism about the long-term prospects of equity issuers could explain these results.
ISSN:1057-5219
1873-8079
DOI:10.1016/j.irfa.2004.02.005