OWNERSHIP CONCENTRATION AND THE CHOICE OF EQUITY OFFERING TECHNIQUES
Post by MSF Chula at Tuesday, 8 August 2017 10:35 AM

This paper empirically investigates the effect of ownership concentration on the firm’s
decision to choose the equity offering techniques between rights offering and public offering
methods by using the sample of listed firms in Thailand. The decision to choose equity offering
choice could be driven by the control retention which will maximize shareholder wealth. The
finding suggests that high ownership concentration firms are more likely to choose a public
offering, which dilutes control, instead of a rights offering, which retains control; although,
rights offerings generate positive wealth effect, while the wealth effect of public offerings is
negative. It is also found that rights offerings by firms with high ownership concentration receive
negative market reaction, whereas public offerings by high ownership concentration firms
receive insignificant market reaction. Overall, the finding document in this study indicates that
high ownership concentration is likely to be detrimental to the wealth of minority shareholders as
its reduces the likelihood of external monitoring.

Last updated at Tuesday, 8 August 2017 10:35 AM