Seasoned equity issues in a closely held market: evidence from France

Jean-François Gajewski (1) , Edith Ginglinger (2)

1 IRG - Institut de Recherche en Gestion
2 DRM - Dauphine Recherches en Management

This paper examines seasoned equity offerings in France. Even though a rights
offering is the primary flotation method, French companies are increasingly using the
relatively expensive public offering method. We show that the market reaction to the
announcement of seasoned equity issues is significantly negative for rights issues and
insignificantly negative for public offerings. Our results suggest that the adverse
selection effect is greater for rights issues than for public offerings, due to stronger
underwriter certification for the public offerings. We find that the share price effect is
positively related to blockholders take-up renouncements for firms with prior
concentrated ownership. For these firms, the favourable ownership dispersion effect
offsets the adverse selection effect.

Mots clés: ownership structure.; flotation methods; seasoned equity issues; ownership structure

Domaines: Gestion et management; Economies et finances

Jean-François Gajewski, Edith Ginglinger. Seasoned equity issues in a closely held market: evidence from France. Review of Finance, 2002, 6 (3), pp.291-319. ⟨10.1023/A:1022024925877⟩. ⟨halshs-00138293⟩