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http://hdl.handle.net/1893/10456| Appears in Collections: | Accounting and Finance Working Papers |
| Title: | Are the Discounts in UK Open Offers and Placings Due to Inelastic Demand? |
| Author(s): | Armitage, Seth Dionysiou, Dionysia Gonzalez, Angelica |
| Contact Email: | dionysia.dionysiou@stir.ac.uk |
| Citation: | Armitage S, Dionysiou D & Gonzalez A (2012) Are the Discounts in UK Open Offers and Placings Due to Inelastic Demand?. Social Science Electronic Publishing, Inc. |
| Keywords: | seasoned equity offer discount inelastic demand open offer placing |
| JEL Code(s): | G30, G32 |
| Issue Date: | 7-Jul-2012 |
| Publisher: | Social Science Electronic Publishing, Inc |
| Abstract: | This paper investigates the large and diverse discounts in UK open offers and placings. Large discounts are a substantial cost to shareholders who do not buy new shares. The existing literature mainly examines US firm-commitment offers and private placements, but UK open offers and placings differ from both types of US offer. The paper presents evidence that inelastic demand, illiquidity of the issuer's shares, and financial distress are key determinants of the discount. The effects of inelastic demand and distress are much more apparent in UK than in US SEOs. We argue that institutional features obscure the role of these variables in the US context. |
| Type: | Working or Discussion Paper |
| URI: | http://hdl.handle.net/1893/10456 |
| URL: | http://ssrn.com/abstract=2122508 |
| Affiliation: | University of Edinburgh Accounting and Finance University of Edinburgh |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| Dionysiou_2012_Are_the_Discounts_in_UK_Open_Offers.pdf | 341.32 kB | Adobe PDF | View/Open |
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