Do underwriters certify value? Evidence from UK rights issues and open offers

Research output: Contribution to journalArticlepeer-review

Abstract

Eckbo and Masulis (1992) and Slovin, Sushka and Lai (2000) have proposed that underwriters of seasoned equity offers certify issuer value. The study tests predictions resulting from these papers and finds little evidence from UK rights issues and open offers that underwriting banks certify. The main purpose of underwriting appears to be simply to guarantee the proceeds. There is a positive reaction to open offers (a type of private placing) but this is unlikely to be due to underwriter certification. There is a large loss of value for companies announcing deeply discounted offers, which is attributed to release of bad news on announcement
Original languageEnglish
Pages (from-to)1239-1273
Number of pages35
JournalJournal of Business Finance and Accounting
Volume29
Issue number9-10
DOIs
Publication statusPublished - 2002

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