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| Author: | Khorana, A. Wahal, S. Zenner, M. |
| Title: | Agency conflicts in closed-end funds: the case of rights offerings |
| Journal: | Journal of Financial and Quantitative Analysis
2002 : JUN, VOL. 37:2, p. 177-200 |
| Index terms: | Agencies Agency theory Initial public offerings |
| Language: | eng |
| Abstract: | The authors study 120 rights offerings by closed-end funds from 1988-1998. On average, rights offerings are announced when funds trade at a premium. The premium decline is more severe when increases in the invetsment advisor's compensation are larger and when the fund uses affiliated brokerdealers to solicit subscriptions to the offer. A clinical analysis shows that rights offerings allow investment advisors to sidestep fee rebates and increase pecuniary benefits to affiliated entities. Overaall, our results suggest the predence of significant conflicts of interest in rights offerings by closed-end funds. |
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