Practitioner perspectives on the seasoned equity offering process in the UK

Institutional practices around the time of equity offers by listed firms have recently been the subject of scrutiny by UK regulatory authorities including the former Monopolies and Mergers Commission. Moreover, several published studies indicate that managers in both Britain and the US continue to make extensive use of the equity issue methods that cause the most harm to shareholders' wealth. To investigate how and why firms decide between alternative offering methods, this paper reports the results of 11 interviews conducted with various parties involved in the share issue process in the UK, including industrial firms, accountants and advisers, as well as a questionnaire sent to the senior management of companies with recent experience of making share offers. The results indicate: (i) that the decision is contingent on the combined impact of a range of factors, particularly input from advisers and (ii) that a case can be made for re-examining the stringency of the UK's pre-emption guidelines.