Cheap-stock tunneling around preemptive rights

• 成果类型: Article
• 署名作者: Fried, Jesse M.; Spamann, Holger
• 署名单位: Harvard University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2020.03.001
• 发表日期: 2020
• 页码: 353-370
• 关键词: Controlling shareholder; Tunneling; Preemptive rights; Rights offer; Equity issuance

摘要

Preemptive rights are thought to protect minority shareholders from cheap-stock tunneling by a controlling shareholder. We show that preemptive rights, while making cheap-stock tunneling more difficult, cannot prevent it when asymmetric information about the value of the offered shares makes it impossible for the minority to know whether these shares are cheap or overpriced. Our analysis can help explain why sophisticated investors in unlisted firms and regulators of listed firms do not rely entirely on preemptive rights to address cheap-stock tunneling, supplementing them with other restrictions on equity issues. (C) 2020 Elsevier B.V. All rights reserved.