The seasoned-equity issues of UK firms: Market reaction and issuance method choice

Edel Barnes, Martin Walker

Research output: Contribution to journalArticlepeer-review


This study examines the seasoned equity issues of companies traded on the London Stock Exchange. Recent regulatory changes have allowed UK firms more discretion in choice of issue approach, and this has led many firms to issue through placing in preference to a rights issue. Having first documented the trend towards increasing use of placings, we go on to identify an interesting subset of placings that are less likely to be anticipated by the market, and find a significant positive market reaction to such placings, which contrasts with the significant negative reaction we find for issues by rights. We also examine the choice of seasoned equity issuance method, focusing on the choice between placings versus rights issues. We develop a model to explain the choice of equity issue method that achieves a high level of predictive accuracy. © 2006 Blackwell Publishing Ltd.
Original languageEnglish
Pages (from-to)45-78
Number of pages33
JournalJournal of Business Finance and Accounting
Issue number1-2
Publication statusPublished - Jan 2006


  • Equity issuance
  • Flotation method
  • Information
  • Market reaction
  • Ownership
  • Placings
  • Rights issues


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