Semi-strong Form Efficient or Not? Tests of Bonus and Rights Issues
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8.3 Reaction of returns to the announcement of rights issues
R ightsissu esa nd in formational conten t
A rights issue is an issue of new shares to existing shareholders on a pro-rata basis.
With a rights issue, shareholders receive the rights from the company to subscribe
for additional shares at a subscription price and in a fixed ratio to the number of
shares already held. The company therefore has to set a subscription price and a
fixed ratio for the rights issue. In China, the subscription price for the rights issue
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