This study examines which factors make firms choose the floatation method, rights issues vs. public offers, in their seasoned equity offerings process. Using Korean data during 2000~2015, we find that rights offering firms are less subject to information asymmetry, have more growth opportunities, and are in better financial position than public offering firms before their SEO announcements. We also document that rights issue firms show less negative stock performance and better operating performance over the long run. In addition, rights issue firms try to increase the subscription rate by sufficiently lowering offer prices, to avoid offering failure. The results are generally consistent with the Heinkel and Schwartz (1986) model in that firms with better quality and less information asymmetry choose rights issues.

JEL Classification: G30

Key words: Seasoned equity offering, Floatation method, Rights issues, Public offers, Information asymmetry