Handbook of Corporate Finance Empirical Corporate Finance Volume 1

294 B.E. Eckbo et al. the-money with American exercise rights over most or all of the security’s life. Many of these securities ...

Ch. 6: Security Offerings 295 information effect associated with a sophisticated institutional investors agreeing to pur- chase ...

296 B.E. Eckbo et al. declines, thereby giving investors significant downside protection.^21 Not surprisingly, Brophy, Sialm, an ...

Ch. 6: Security Offerings 297 tests whether firms undertaking SEOs when facing poor growth opportunities, mea- sured by market t ...

298 B.E. Eckbo et al. Masulis (2006)examining situations where lenders are also debt or equity underwriters. The basic concern i ...

Ch. 6: Security Offerings 299 Ta b l e 1 0 SEOs by NYSE- and AMEX-listed firms, classified by flotation method (FC=firm commitme ...

300 B.E. Eckbo et al. Ta b l e 1 0 (Continued) Total issues Industrial issues Utility issues Total FC Stand Right Total FC Stand ...

Ch. 6: Security Offerings 301 Ta b l e 1 1 Equity security issues by firms listed on the Tokyo Stock Exchange, 1956–2003 a Right ...

302 B.E. Eckbo et al. Ta b l e 1 1(Continued ) Rights offerings Public offerings Preferred stocks Private placements Exercise of ...

Ch. 6: Security Offerings 303 Ta b l e 1 1(Continued ) Rights offerings Public offerings Preferred stocks Private placements Exe ...

304 B.E. Eckbo et al. 4.2. Adverse selection and current shareholder takeup Myers and Majluf (1984)provide the first analytical ...

Ch. 6: Security Offerings 305 Eckbo and Masulis (1992)generalize the Myers–Majluf framework by explicitly al- lowing current sha ...

306 B.E. Eckbo et al. transfer cost associated with an uninsured rights offer increases askdecreases. eventu- ally making it opt ...

Ch. 6: Security Offerings 307 Fig. 3. Illustration of the flotation method pecking order. Source:Eckbo and Norli (2004). The hor ...

308 B.E. Eckbo et al. expected to be fully subscribed with the help of outside investors. There is growing ev- idence to support ...

Ch. 6: Security Offerings 309 Ta b l e 1 2 Predicted market reactionARto SEO announcements as a function of the flotation method ...

310 B.E. Eckbo et al. Ta b l e 1 2 (Continued) Study Model specifics Model implications forAR Eckbo and Norli (2004) Eckbo and M ...

Ch. 6: Security Offerings 311 Strictly speaking, tests of theMyers and Majluf (1984)predictionAR0 requires a sample of direct e ...

312 B.E. Eckbo et al. The following numerical example illustrates a positive issue surprise effect by simply adding the sharehol ...

Ch. 6: Security Offerings 313 which is counterfactual (Table 6). Moreover, there is no explicit role for current share- holder t ...