Corporate Activity: Right Issue
What is Right Issue? Rights issue is yet another way using which companies raise additional capital from the public. In a rights issue, the company offering these rights gives its existing shareholders a right to buy new shares of the company at a discount from its current market price at a specified future date. The right works just like an option, so the investor getting the right can choose to exercise it or not. Impact of Right Issue on Share Price I believe that investors are concerning on how right issue will impact share price. Here we go. I have extract the data for right issue that occur for the past one year. The result is within my expectation. Market: KLSE Period: May 2018 - Aug 2019 Comparison of share price from the date of announcement to 1 day before entitlement date Among 29 samples that I selected, 18 of the stocks shows negative return. 2 stocks has no movement and only 8 stocks shows positive return. The average return for this 29 stocks is