Private placements and rights issues in Singapore

Abstract

This study documents positive announcement effects of seasoned equity issues in Singapore for the period 1987-1996. For rights issues, we find higher abnormal returns for firms that undertake larger issues. The issue size reflects the magnitude of favorable news on the issuing firms' earning prospects. When firms announce investment opportunities or capital expenditure simultaneously, the positive impact is even greater. For private placements, the abnormal returns are positively related to the placement price. The greater is the requirement for external equity financing, the higher is the placement premium. Issue size seems to reflect the impact of investment opportunities on the firms. ©2002 Elsevier Science B.V. All rights reserved.