An analysis of the share price and accounting performance of rights offerings in China

Junbo Wang, K. C.John Wei, Stephen W. Pruitt

Research output: Journal article publicationJournal articleAcademic researchpeer-review

19 Citations (Scopus)


This study examines both the short- and long-term share price and accounting performance of Chinese rights issues. Employing data from 432 rights offerings issued between 1994 and 1999, the study documents a statistically significant positive abnormal stock return of 4.8% on the ex-date. Over the long run, rights issuing firms significantly outperform control portfolios of firms matched on the basis of size, the book-to-market ratio, and both size and the book-to-market ratio. Similar to the case of U.S. experience, investors in China appear to underreact to the initial announcements of new quity offerings, but in the opposite direction. Interestingly, although firms issuing rights generally underperform their non-issuing peers in important operating performance metrics such as return on assets, their growth rates of sales and capital expenditures far outstrip non-issuers. Finally, the findings document that changes in the long-term stock performance of rights issuing firms are positively correlated with changes in post issue accounting performance.

Original languageEnglish
Pages (from-to)49-72
Number of pages24
JournalPacific Basin Finance Journal
Issue number1
Publication statusPublished - 1 Jan 2006
Externally publishedYes


  • Accounting performance
  • Chinese rights offerings
  • Share price performance

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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