Banks never lend at less than the interbank floating rate, LIBOR. We argue that this must be because it is insufficiently profitable for those that could lend at less than LIBOR to do so and discuss circumstances in which this would be the case. Using data from 1988-1991, we show that LIBOR...

The paper discusses how some of the main types of interaction between financing and value can be incorporated in the discounted cash flow model of valuation, including effects arising from taxes, transactions costs, disclosure, information asymmetry and agency problems. It explains whether a...

UK companies and their shareholders have increasingly opted to have newly issued shares privately placed rather than selling them via a rights issue. We present a model of a choice between these two methods. We see rights issue as similar to the type of issue envisaged by Myers and Majluf...

Eckbo and Masulis (1992) and Slovin, Sushka and Lai (2000) have proposed that underwriters of seasoned equity offers certify issuer value. The study tests predictions resulting from these papers and finds little evidence from UK rights issues and open offers that underwriting banks certify. The...

The paper presents evidence from UK rights issues on the discounts at which large blocks of new shares plus rights are sold. The shares are renounced by the shareholders entitled to them and placed with passive investors at substantial discounts of around 8% to the expected ex-rights midpoint...

This paper determines the market value of dividends in the UK during periods before and after 1997. Previous studies, which use the ex-dividend day method, tend to provide noisy and potentially biased measures of dividend value. We estimate the value of dividends from the prices of shares that...

The paper reviews evidence from the USA and UK on seasoned equity offers (SEOs) and rights issues. There are two main avenues of research: first, the market reaction to announcements of SEOs, and the related questions of the price elasticity of demand for new shares and the timing of issues;...