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The pricing of French unit seasoned equity offerings

Ginglinger, Edith; Chollet, Pierre (2001), The pricing of French unit seasoned equity offerings, European Financial Management, 7, 1, p. 23-38

Type
Article accepté pour publication ou publié
Date
2001
Journal name
European Financial Management
Volume
7
Number
1
Publisher
Blackwell
Pages
23-38
Metadata
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Author(s)
Ginglinger, Edith
Chollet, Pierre
Abstract (EN)
Units are bundles of common stock and warrants. By issuing units, firms precommit to a future and uncertain seasoned offering at the exercise price of the warrants. This study shows that the issuance of units seasoned offerings in France is accompanied by significant abnormal returns of on average 9-12%, depending on the computing methods. Underpricing increases with the risk of the issuer and the relative size of the future seasoned equity issue linked to warrant exercises. Our results are consistent with our signaling hypothesis. [ABSTRACT FROM AUTHOR]
Subjects / Keywords
Signaling; Underpricing; Seasoned equity offerings; Warrants; Units
JEL
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
G14 - Information and Market Efficiency; Event Studies; Insider Trading