234 B.E. Eckbo et al.
3.7. Rights and standby offerings 286
3.8. Shelf registered offerings 286
3.9. Over-allotment options, warrants and other direct expenses 287
3.10. Market microstructure effects 289
3.11. Miscellaneous offerings 292
3.11.1. Global offerings 292
3.11.2. Convertible securities and warrants issuance 293
3.11.3. Private placements of equity and convertibles 294
3.11.4. Unit offerings in IPOs and SEOs 296
3.12. Conflicts of interest in the security offering process 296- The flotation method choice 298
4.1. The paradoxical decline in the use of rights 298
4.2. Adverse selection and current shareholder takeup 304
4.3. Predicting the market reaction to issue announcements 308
4.3.1. Models with a single flotation method 310
4.3.2. Modelling the flotation method choice 312
4.4. Evidence on issue announcement returns 314
4.4.1. Market reaction to SEOs in the U.S. 315
4.4.2. Market reaction to SEOs internationally 318
4.4.3. Market reaction to corporate debt offerings 322
4.5. Implications of the announcement-return evidence 324
4.6. Signaling and the rights offer discount 328 - Security offerings and market timing 330
5.1. Timing theories with rational market pricing 330
5.1.1. Adverse selection and the business cycle 331
5.1.2. Optimal investments and equity offerings 334
5.1.3. Pseudo market timing 336
5.2. Timing theories with non-rational market pricing 336
5.2.1. Timing of firm-specific returns 336
5.2.2. Timing the market 338
5.3. Evidence on long-run post-issue stock returns 339
5.3.1. Sample selection 340
5.3.2. Cumulative buy-and-hold returns for issuers versus matched firms 341
5.3.3. Average monthly abnormal returns using factor pricing regressions 347
5.4. Robustness issues 350
5.4.1. Alternative and omitted risk factors 352
5.4.2. Time-varying factor loadings 354
5.4.3. Issue-purged factors 355 - Conclusions and issues for future research 355
References 361