SHAREHOLDER WEALTH EFFECTS OF COMMON STOCK OFFERINGS

Majed R. Muhtaseb and George C. Philippatos

This paper investigates wealth effects on common shareholders of public offerings and rights offerings of common stock issues at the announcement and issuance dates. At the announcement date market discipline is more severe for industrials than for utilities and more punitive for public offerings than for rights offerings. At the issuance date, market reaction is generally less negative than at the announcement date, and it turns positive for public offerings of utilities. Interestingly, issuance date effects of rights offerings for both industrials and utilities are more detrimental to shareholders' wealth than are those effects of public offerings.