Companies often need external money to maintain their operations and invest in future growth. There are two types of capital that can be raised: debt and equity. Equity financing refers to funds generated by the sale of shares. The main benefit of equity financing is that funds need not be repaid.

c) Are pre-emption rights valuable? Discuss.

d) Discuss the differing UK and US position on rights issues.

e) With reference to relevant theoretical and empirical literature, identify and discuss the reasons that have been put forward to explain the preference for non-underwritten offerings over rights issues.