Raising Capital During a Crisis: An Investigation on Market Reactions to Equity Raises Through Rights Offerings and Private Placements in Public Equity Before and During the Pandemic.

Abstract: This study examines returns following announcement of upcoming private placements and rights offerings, before and during the Covid-19 pandemic, to measure investor preferences in method of equity financing. The results produced did not differ significantly between the time periods. An increase in preferences for private placements in public equity over rights offerings was noted but could not be statistically proven. We used a matching algorithm to identify announcements and corresponding returns of companies that shared similar qualities, a method that we believe can be expanded upon to yield more elaborate and significant results in future applications.