Rights Issue
Interactive

Rights Issue

Intuition Publishing
Updated Sep 25, 2020

A rights issue is a method by which a firm issues, to its shareholders in proportion to their existing shareholdings, a right to buy additional shares in the company at a specified discounted price (subscription price) within a specific time frame. We examine the differences between a rights issue and that of an IPO and look at how existing shareholders benefit from rights issues. The values of rights issues are investigated and the market reaction to rights issues is explored.