Seasoned Equity Offerings: Stock Market Liquidity and the Rights Offer Paradox


  • Edith Ginglinger,

    Corresponding author
    • Université Paris-Dauphine, DRM
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  • Laure Matsoukis,

    1. Université Paris-Dauphine, DRM
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  • Fabrice Riva

    1. IAE Lille and LEM
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    • They thank Eric de Bodt, François Degeorge, François Derrien, Espen Eckbo, Jean- François Gajewski, Michael Goldstein, Giancarlo Guidici, Robert Hansen, Bill Megginson, Myron Slovin, Marie Sushka, and participants in the Australasian Finance and Banking Conference, Sydney (December 2009), the 2009 FMA annual meeting, the 2009 AFFI conference, the 2009 European Financial Management Association meeting for helpful comments. They thank especially an anonymous referee and Martin Walker, the editor, for many detailed and helpful suggestions. The financial support of the Fédération Bancaire Française Chair in Corporate Finance is gratefully acknowledged.

Address for correspondence: Edith Ginglinger, Université Paris-Dauphine, place du Marechal de Lattre, 75775 Paris cedex 16, France. e-mail:


This paper examines the impact of market liquidity on seasoned equity offerings (SEO) characteristics in France. We find that, besides blockholders’ takeup, liquidity is an important determinant of SEO flotation method choice. We document higher direct equity offering flotation costs, but also improved stock market liquidity after public offerings and standby rights relative to uninsured rights. After controlling for endogeneity in the choice of SEO flotation method, we find that pure public offerings and standby rights are comparable in terms of direct costs and liquidity improvement. Our results provide new insights as to why firms choose public offerings despite apparently higher costs.