Rights Issues and Creeping Acquisitions in India
28 Pages Posted: 2 Oct 2012 Last revised: 10 May 2015
Date Written: July 6, 2012
Abstract
We analyze the extent to which promoters of firms listed on the Bombay Stock Exchange are using rights issues to circumvent regulatory provisions related to creeping acquisitions. We find that promoters use rights issues that do not have specific objectives for purposes of realizing an increase in their shareholdings. We find that a rights issue often follows a year in which the promoter has realized a loss of shareholdings. The results are especially true for firms belonging to a business group.
Keywords: creeping acquisition, rights issue, tunneling, business groups
JEL Classification: G18, G32, G38
Suggested Citation: Suggested Citation