The favorable influence of rights issue can provide a stable source of funds for the company. By issuing new shares to existing shareholders, the company can raise the necessary funds to expand production, invest in research and development and open up markets. This will help to enhance the company's operating strength and competitiveness, and then promote the company's long-term development.
Rights issue can increase the company's share capital and market value. When a company issues new shares, its total share capital will increase, and its market value depends on the company's share price and total share capital. If the company's share price remains stable or rising, and the price of new shares is reasonable, then the company's market value will increase. This will help attract more investors and improve the company's visibility and influence.
The rights issue can also increase the rights and interests of existing shareholders. In the process of rights issue, existing shareholders have the priority to subscribe for new shares according to a certain proportion, thus increasing their shareholding ratio in the company. This will improve the right to speak and interests of existing shareholders and help safeguard the overall interests of shareholders of the company.
The negative impact of the rights issue may also have a negative impact on the company. The rights issue leads to an increase in share capital, which means that the shareholding ratio of existing shareholders of the company will be diluted. If the IPO price is too low or exceeds the market value, the rights and interests of existing shareholders will be damaged. This may lead to the dissatisfaction of existing shareholders with the company and question the company's business decision.
The rights issue may cause the market to worry about the company. If the market is not optimistic about the company's prospects, then the subscription of new shares may be unsatisfactory, which will be interpreted by the market as a negative signal of the company's business prospects. This may cause investors to lose confidence in the company's stock, which in turn will lead to a decline in the stock price and affect the company's market value.
The rights issue may increase the financing cost of the company. The issuance of new shares needs to pay a certain issuance fee, including underwriting fee and lawyer's fee. These expenses will increase the financial burden of the company and put some pressure on its profitability.
Conclusion The rights issue has both positive and negative effects. It can provide a stable source of funds for the company, increase the company's share capital and market value, and improve the rights and interests of existing shareholders. At the same time, however, the rights issue may dilute the rights and interests of existing shareholders, cause market concerns and increase financing costs. When the company implements the rights issue, it needs to reasonably grasp the timing and issue price of the rights issue, so as to maximize the positive effects of the rights issue and avoid the negative effects.