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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Are the Discounts in Seasoned Equity Offers Due to Inelastic Demand?
Authors: Armitage, Seth
Dionysiou, Dionysia
Gonzalez, Angelica
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Keywords: seasoned equity offer
inelastic demand
open offer
Issue Date: Jun-2014
Publisher: Wiley-Blackwell
Citation: Armitage S, Dionysiou D & Gonzalez A (2014) Are the Discounts in Seasoned Equity Offers Due to Inelastic Demand?, Journal of Business Finance and Accounting, 41 (5-6), pp. 743-772.
Abstract: This paper investigates the large and diverse discounts in UK open offers and placings. Large discounts are a substantial cost to shareholders who do not buy new shares. The existing literature mainly examines US firm-commitment offers and private placements. The institutional setting differs in the UK, in ways that make the theory of inelastic demand for shares more important as an explanation for discounts than in the US. The paper finds that inelastic demand, or illiquidity of the issuer's shares, and financial distress, are key determinants of the discount. We expect these results to apply to other stock markets.
Type: Journal Article
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Rights: The publisher does not allow this work to be made publicly available in this Repository. Please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study.
Affiliation: University of Edinburgh
Accounting and Finance
University of Edinburgh

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