A Rent Protection Explanation for SEO Flotation Method Choice

Author(s):  
Xueping Wu ◽  
Zheng Wang ◽  
Jun Yao
2016 ◽  
Vol 51 (3) ◽  
pp. 1039-1069 ◽  
Author(s):  
Xueping Wu ◽  
Zheng Wang ◽  
Jun Yao

AbstractWe model how a rent-protection motive drives the choice of flotation method in new equity issuance between two polar cases: rights issues and cash offers. Unexpected new blockholders would emerge in control-diluting cash offers and share in jealously guarded control benefits. But rights issues help the incumbent controlling shareholders avoid control dilution and safeguard their private benefits. Under asymmetric information about private benefits, the choice of flotation method can convey information about hidden private benefits and hence firm value. Our model can explain even a negative announcement effect of rights issues, and it supports not just one but three important equilibriums.


2017 ◽  
Vol 16 (5) ◽  
pp. e2188
Author(s):  
J. Purvaneckas ◽  
R. Kavaliauskaitė ◽  
A. Želvys

1989 ◽  
Vol 178 (2) ◽  
pp. 404-407 ◽  
Author(s):  
Daniel Biosmenu ◽  
François Lépine ◽  
Marcel Gagnon ◽  
Hermann Dugas

2009 ◽  
Vol 10 (1) ◽  
pp. 20-32
Author(s):  
Colin Dey ◽  
John Grinyer ◽  
Donald Sinclair ◽  
Hanaa El‐Habashy
Keyword(s):  

2010 ◽  
Vol 81 (3) ◽  
pp. 349-354 ◽  
Author(s):  
Cynthia C. Harper ◽  
Beth A. Brown ◽  
Anne Foster-Rosales ◽  
Tina R. Raine

1984 ◽  
Vol 84 (3-4) ◽  
pp. 209-214 ◽  
Author(s):  
Elwira Lachowicz ◽  
Danuta Szlendak ◽  
Zofia Trybulowa
Keyword(s):  

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