Does the issue method influence the market reaction to seasoned equity offer announcements?

The evidence in this note indicates that the average stock market reaction to news of ordinary equity issues by quoted companies may depend on the share issue method employed. Using a sample of announcements made in the UK between 1989 and 1991 we find that the market response is significantly negative when the disclosure relates to a rights issue, but that there are no significant share price changes when announcements about equity placings and open offers take place. This result appears to be inconsistent with the theoretical analysis contained in Myers and Majluf (Journal of Financial Economics, 13, 1984).