Rights issues: Retail shareholders and their participation decisions

Hue Hwa Au Yong, Christine Brown, Chloe Ho, Chander Shekhar

Research output: Contribution to journalArticlepeer-review


Using daily ownership data, this study documents median participation rates for retail and institutional shareholders in rights offers in Australia of 60% and 94%, respectively. At the median, the rights issue results in 0.25% (1.34%) of the value of firm market capitalization (offer size) being transferred from retail shareholders to institutional shareholders. Retail shareholder participation is higher in renounceable offers, offers with larger discount and those made by firms with larger market capitalization and lower risk. Companies with above median retail participation rates perform better in the long run. The results suggest that, on average, retail shareholders make rational participation decisions in rights offerings.
Original languageEnglish
Pages (from-to)917-944
Number of pages28
JournalInternational Review of Finance
Issue number3
Early online date4 May 2020
Publication statusPublished - Sep 2021


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