Impact of Right Issue Announcement on Shareholders’` Return of the Listed Companies in Bangladesh: Evidence from Dhaka Stock Exchange

Abstract

This paper empirically investigates whether there is any significant impact
of right issue announcement in shareholders return surrounding the pronouncement
date. 35 rights offering from 2001 to 2010 are considered as the database for this
study. Following the event study methodology it reveals that before the
announcement there is a positive trend of return from the stocks that are going to
announce the right issue. But after the announcement this positive trend follows a
declining pattern. The study also reveals statistically significant cumulative
abnormal and excess returns on the announcement and surrounding dates. This
outcome supports the notion of information asymmetry problem in Bangladesh
capital market.