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.