Share issuance: an Australian study

The environment in which equity is issued and the mechanisms for issuing equity differ in Australia compared with other jurisdictions. In light of these differences, this thesis provides an examination of the determinants of the choice between seasoned equity types, the factors that drive variation in aggregate equity issuance and the impact of equity issuance on stock returns. Chapter 2 provides an outline of the characteristics of the Australian Securities Exchange (ASX) that may affect equity issuance, and provides summary statistics on the types and trends of seasoned equity issues used in Australia across time. To contextualise the current environment of share issuance in Australia, the chapter begins with a brief discussion of the formation of the equity market, changes in the composition of investors within the market through time and the regulations, regulators and tax system that govern the market. Each of these characteristics might be expected to affect both the amount and type of equity issued. Chapter 2 then concludes with an examination of recent trends in seasoned equity offerings (SEOs) across private placements, rights issues, dividend reinvestment schemes and share purchase plans. Significant variation in seasoned equity offerings is reported over time and across seasoned equity offerings types over the sample period, with private placements the most popular seasoned equity offering both in terms of total number of issuances and the dollar amount raised, followed by rights issues, dividend reinvestment schemes and share purchase plans.