Equity Rights Issues in Spain: Flotation Costs and Wealth Effects

Abstract

This paper analyses the flotation costs and the share price reaction of equity offerings in Spain. The results report a positive relationship between relative flotation costs and the underwriting of an issue, and a negative relationship between such costs and ownership concentration. Fixed flotation costs and a negative relationship with the gross offer proceeds are also observed. On average, there is a negative share price reaction on the date of the 'previous communication' to the "Comisión Nacional del Mercado de Valores". The different sub-samples analysed according to the underwriting of the issue and the discount offered reveal no statistical differences. Copyright Blackwell Publishers Ltd, 2003.