Ordinary Share Price Behaviour Around 'C' Share Issues by Investment Trusts

Abstract

This paper examines the "C" share issue, a method of issuing shares which is peculiar to the UK investment trust industry. In particular, we analyse abnormal returns and discount/premium to net asset value behaviour of the ordinary shares both before and after the announcement of "C" share issues. The research was conducted using event study methodology and an innovative approach to the analysis of discount/premium movements. The results suggest a tendency for the ordinary shares to outperform the FT-SE Actuaries Investment Trust Index over the six months following a "C" share issue announcement, despite a reduction in the premium to net asset value rating of the shares over the same period.