Jean-François Gajewski
email: edith.ginglinger@dauphine.fr

Seasoned Equity Issues in a Closely Held Market: Evidence from France

Keywords: JEL Classification: G32, G14 and D80 seasoned equity issues, flotation methods, ownership structure

This paper examines seasoned equity offerings in France. Even though a rights offering is the primary flotation method, French companies are increasingly using the relatively expensive public offering method. We show that the market reaction to the announcement of seasoned equity issues is significantly negative for rights issues and insignificantly negative for public offerings. Our results suggest that the adverse selection effect is greater for rights issues than for public offerings, due to stronger underwriter certification for the public offerings. We find that the share price effect is positively related to blockholders take-up renouncements for firms with prior concentrated ownership. For these firms, the favourable ownership dispersion effect offsets the adverse selection effect.

Introduction

Despite the lower flotation costs of rights issues, most U.S. firms choose public offerings to raise capital. This puzzling evidence is often referred to as the equity financing paradox. Several explanations have been put forward to explain this paradox, which suggest that rights offerings may be more expensive in other ways. These explanations include capital gains taxes [START_REF] Smith | Alternative Methods for Raising Capital: Rights versus Underwritten Offerings[END_REF], shareholder selling costs [START_REF] Hansen | The Demise of the Rights Issue[END_REF], differences in prior share ownership [START_REF] Hansen | Direct Equity Financing: A Resolution of a Paradox[END_REF] and adverse selection costs [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF]. 1 The purpose of this study is to provide new international evidence on the valuation effects and the costs associated with alternative flotation methods.

The relative frequencies of rights issues and public offerings differ strongly across countries. For example, in the U.S., the overwhelming majority of corporations choose the firm commitment underwriting method. In Japan, according to [START_REF] Kang | How Different is Japanese Corporate Finance? An Investigation of the Information Content of New Equity Issues[END_REF], 66% of the common stock offerings over the period 1985-1991 were public offerings. In most European countries and in Australia, rights issues are the primary flotation method. 2 In contrast to the U.S. results, several studies find a positive or a non-negative stock price reaction to the announcement of equity offerings in these countries.

In this paper, we investigate seasoned equity offerings in France, where rights issues represented 90% of all common stock offerings over the period 1986-1996. Our sample includes uninsured rights, rights with standby underwriting and public offerings.

1 For a review, see [START_REF] Eckbo | Seasoned Equity Offerings: a survey[END_REF]. 2 See [START_REF] Loderer | Stock Offerings in a Different Institutional Setting: the Swiss Case[END_REF] for Switzerland, [START_REF] Hietala | An Implicit Dividend Increase in Rights Issues: Theory and Evidence[END_REF] for Finland, [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF] for Norway and [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF] for the U.K..

Throughout the paper, we refer to issues without rights as public offerings. The French market has some distinctive characteristics, which motivate this study. While a rights offering is the primary flotation method in France, French firms select the public offering method more frequently than in other European equity markets. French firms relied on rights offerings almost exclusively until 1985. But this has changed recently, with the proportion of public offerings increasing from 4.84% over the [1986][1987][1988][1989] period to 16.84% over the 1990-1996 period. 3 We examine the evidence on flotation costs, and confirm the existence of an equity financing paradox in France. The growing preference for the more expensive public offering method is documented and potential explanations are examined.

We investigate the market reactions to several categories of equity issue announcements in France. We also examine the determinants of the market reaction to these issue announcements by means of cross-sectional regressions. Our results indicate that rights offerings by French firms lead to a more negative signal of share value than do public offerings. For the 1986-1996 period, we find significant two-day average excess returns of -0.74% for standby rights issues and -1.11% for uninsured rights.

Public offerings generate an insignificant negative return. Further, when we look at the more recent 1990-1996 period, we find significant two-day average excess returns of -1.28% for standby rights issues, -2.84% for uninsured rights, and an insignificant negative return for public offerings. Our results suggest that the choice of a rights issue in France should be seen as a more negative signal of share value, especially in the more recent period.

The offer price for French public offerings is determined four days on average before the beginning of the issue period. Further, the issue price is subject to regulatory constraints. These constraints increase the risk for the underwriter, who will only agree to underwrite the public offering if he assesses that the stock's fundamental value is higher than the offer price. We argue that French public offerings are characterised by stronger underwriter certification and monitoring than U.S. firm commitments and that this may reduce the adverse selection effect. Our evidence can be compared to the results of [START_REF] Cooney | Underwriter Certification and Japanese Seasoned Equity Issues[END_REF] who find a positive abnormal return on the announcement date of Japanese firm commitments and to the results of [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF] who find a significant positive announcement return for U.K.

placings.

Further, we find that the announcement effect of seasoned equity offerings is (i) more negative when the issue size is large and the preannouncement abnormal performance of the stock is high, and (ii) more positive when the gross proceeds of the issue are used to finance an acquisition or an investment.

We focus on differences in corporate control motives that may explain the choice between alternative flotation methods, and provide evidence on the effects of blockholders4 renouncing their rights to purchase shares. The French equity market, like most European equity markets, is dominated by closely held firms. [START_REF] Hansen | Direct Equity Financing: A Resolution of a Paradox[END_REF] argue that firms with concentrated share ownership will choose rights issues. Consistent with that argument, we find that the percentage of shares held by the main shareholder in France is significantly greater for rights offers.

In France, the blockholders must disclose in the issue prospectuses their intention to subscribe or to renounce their new share allocation. Our evidence shows that share allocations not taken up by blockholders are much larger for underwritten public offerings than for rights and standby offerings. This is consistent with the Eckbo and Masulis (1992) results, who show that rights offerings become more costly and less attractive as take-up by current shareholders falls. In their model, the issuing firms show adverse selection to a degree that, all else being equal, is inversely related to the current shareholder take-up. Then, the market reaction should be negatively related to the shareholder take-up. Our evidence confirms this prediction for the firms that are not closely held by a controlling shareholder. 5 For the closely held firms, blockholders take-up renouncements are favourable news for external investors, which positively affects the market reaction. We conjecture that increasing ownership dispersion enhances share value for these firms, by increasing incentives for management monitoring and especially by attenuating conflicts of interest between majority and minority shareholders. The likelihood of tunneling (transfer of resources out of the company to its controlling shareholder), which is frequently a problem in civil-law countries, such as France (see, for instance, Johnson et al. 2000), could be particularly reduced.

We also report that public offerings are generally characterized by strong underwriter certification due to high risk born by underwriters, especially when there are large renouncements by blockholders. This certification may more than offset the greater adverse selection costs associated with public issues and explain the lack of market reaction at the announcement of a public issue.

The paper proceeds as follows. In section 2, the characteristics of French seasoned equity offerings are described. In section 3, we give evidence on flotation costs. Section 4 shows evidence on the valuation effect of offering announcements. Section 5 puts forward factors explaining market reaction on the date of announcement. The summary and conclusions are given in section 6.

Institutional framework and data

The French institutional setting

A seasoned equity offering has to be approved at an extraordinary general shareholders' meeting. All decisions at the extraordinary general shareholders' meeting need a majority of 66.6% of the voting rights. 6 French law grants shareholders a right to purchase new shares, but the extraordinary general shareholders' meeting may waive this pre-emptive right. Approval for an issue may be given for a maximum amount to be raised within five years (rights), three years (without rights) or 26 months (when the type of security and flotation method is not specified). Pre-emptive rights cannot be permanently waived by means of charter amendment.

The French institutional setting for public offerings differs from the U.S. setting in three ways. First, shares are initially offered to current shareholders on a pro-rata basis, for ten days on average, but this purchase priority cannot be traded like a right. 7

6 Decisions made during a general shareholders' meeting require a majority of 50% of the voting rights. Extraordinary general shareholders' meetings are required to alter the charter. 7 Under these conditions, at first glance, outside investors can subscribe only to the part of the issue that is not reserved for current shareholders. Nevertheless, if current shareholders do renounce their allocation, the initial part offered to external investors can be increased. The rate of increase depends on shareholders' renouncements.

Secondly, there is a regulatory constraint on the issue price. Thirdly, public offerings are generally underwritten through a standby-underwriting contract.

In French public offerings, the offer price and the size of the issue are decided on the most recent COB date, 8 which is on average four days before the beginning of the issue period. The underwriter incurs the risk of adverse changes in share prices from the COB date to the end of the average ten-day priority period. In the U.S. firm commitment method, the offer price is set the day before the public offering date and the offering is very short, usually just a few hours. The French constraints on the issue price increase the risk for the underwriters, who will only underwrite a public offering if their assessment of the true value of the stock is higher than the offer price. The existence of a priority period for current shareholders increases the underwriter's risk by postponing the end of the issue period. As a result, underwriter certification in French public offerings may be stronger than in U.S. firm commitments. From the perspective of the [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF] model, underwriters of French public offerings may be effective monitors: overvalued firms may be forced to choose rights issues or uninsured public offerings.

Equity issues in France over the period 1986-1996

All equity issues taking place in the French market can be identified through the annual reports of the COB. Empirical tests are run for offers made over the 1986-1996 period. Prices are extracted from the Euronext database. In our initial sample, 590 equity issues from 1986 to 1996 are examined and classified by their characteristics.

The final sample excludes all issues that do not meet the following criteria:

-The issue involves a single type of security and does not come with a stock dividend; units of common stock and warrant offerings are excluded as well;

-The issue does not involve a common stock reduction or a restructuring plan;

-The firm does not make important new releases, such as earnings, at the time of the issue announcement.9

These criteria produce a sample of 219 offerings described in table 1, of which 90% are rights issues and 10% are public offerings. In France, most seasoned equity issues, whether rights or not, are underwritten.

[Insert table 1]

Table 2 describes the characteristics of the sample. The characteristics of the new issues are reported in the registration statement filed with the COB and include offering proceeds, subscription price, number of current shares, underwriters' name and shareholdings. The company also provides an estimate of the flotation costs.

[Insert table 2]

The average size of an equity rights offering is 351 million FF and the average size of a public offering is 1241 million FF. On average, the subscription price is 80% of the prevailing stock price (78% for rights issues and 95% for public offerings). French firms are required to fix the rights subscription price at the agreement date, which is on average 10 days before the beginning of the subscription period. The subscription period lasts for 15 days on average. The subscription price in public offerings is set nearer to the beginning of the issue period (on average 4 days before), and the subscription period is shorter (on average 8 days). This relatively early price setting date in France compared to the U.S. explains why the issuer and the underwriter put more effort into anticipating the secondary market price when setting the offer price. The average number of shares offered, as a percentage of outstanding and new shares, is 23.47% (24.12% for rights issues and 17.73% for public offerings). It is interesting to note that the choice of flotation method varies from country to country though it is influenced by the size of firms. For instance, in the U.K., according to [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF], firms that choose placings are very small relative to rights issuers. In the U.S., uninsured rights issuers are small firms, but no significant difference in issuer size appears between standby rights issuers and firm commitments issuers [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF]. In France, large firms prefer public offers to standby rights, which, in turn, are preferred to uninsured rights. [START_REF] Hansen | Direct Equity Financing: A Resolution of a Paradox[END_REF] show that U.S. firms with more concentrated share ownership tend to choose rights issues. [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF]

Ownership structure and expected shareholder take-up

[Insert table 3]

As highlighted by [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF], current shareholder demand for new equity offerings plays an important role in the decision on flotation method.

Managers expecting low shareholder participation select firm commitments. Firms with a high (medium) expected shareholder take-up choose uninsured rights (standby rights).

Our evidence shows that, on average, 28.8% of the issues lead to blockholder renouncements, either total or partial. The share allocation not taken up by blockholders, when different from zero, averages 62.53% for underwritten public offerings and 33.67% for other flotation methods. The percentage of the issue offered to external investors is largest for underwritten public offerings (62.9%), followed by standby rights issues (46.9%) and finally uninsured rights offerings (37.9%). Uninsured issues, whether rights or public offerings, display large shareholder precommitments: blockholders offer their guarantee for all or part of the issue and in this way substitute bank underwriting. The evidence is consistent with the results of [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF].

Despite blockholder renouncements, the average percentage of shares held by blockholders remains above 50% after the equity offering.10 Hostile takeovers are therefore very difficult unless one or more blockholders participate. Increased shareholder dispersion may not lead to disciplinary effects, because ownership remains concentrated, on average, after the offering. However, even if all the blockholders together own a large part of the shares after the offering, the controlling shareholder may own less than 50%. Moreover, in France, some decisions require a majority of 66.6% of share voting to be approved, which is less likely after an equity offering with blockholder renouncements.

Evidence on flotation costs

Table 2 shows average relative costs for the different flotation methods. The French flotation costs seem much lower in relative value than those reported by [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF] for U.K. issues or [START_REF] Eckbo | Seasoned Equity Offerings: a survey[END_REF] for U.S. offerings. These authors show that the direct flotation costs of public underwritten offerings are over 6% of the issue proceeds, but only 4% for standby rights offerings and 2% for uninsured rights offerings. However, our results are very similar to [START_REF] Singh | Layoffs and Underwritten Rights Offers[END_REF] findings for U.S. rights issues: he reports an average underwriting fee of 1.44% and other expenses of 1.02% of the gross proceeds. In France, the part of the offering subscribed to by outside investors, which is the most costly part of the issue, is much lower than in the United States. When we consider the total flotation costs as a percentage of the public gross proceeds, that is, the part of the offering not taken up by the main shareholders of the firm, the figures are much closer to the U.S. data.

The results of U.S. studies show that flotation costs are higher for firm commitments, even after checking for the issue characteristics (see, for instance, [START_REF] Eckbo | Seasoned Equity Offerings: a survey[END_REF]. Public offerings are also more expensive than rights issues in France. We compare flotation costs for the two flotation methods after checking for the issue and firm characteristics. Table 4 shows the coefficient estimates in cross-sectional regressions on the issue characteristics.

[Insert table 4]

The regression intercept is positive and significant, which indicates a fixed component of flotation expenses. Our results show that the costs of public offerings are significantly higher than those of rights issues. The equity financing paradox is therefore confirmed in France: a growing proportion of French firms issuing common stock choose the relatively more expensive public offering method over the less expensive rights method.

The flotation costs, in relative value, decrease with the gross proceeds of the offer, as a result of economies of scale, and increase with the percentage of the offering that is underwritten. The costs increase with the percentage of the issue not taken up by blockholders: the administrative costs and the banking costs are higher for issues where a large fraction is offered to the public. Finally, the flotation costs were lower during the 1990-1996 period. Until the mid-eighties, flotation fees, and especially underwriting fees, were set at a virtually fixed percentage of the gross proceeds (2.5% for the underwriting fees) with underwriters compensated only marginally for the different levels of offering risk. The growing competition among banks due to regulatory changes and the privatisation of several banks caused flotation costs to decrease over time.

Valuation effects of equity offering announcements

Stock price reaction to seasoned equity offerings made by U.S. firms has been extensively examined. A large number of studies of US seasoned equity offerings show that announcements are associated with a decrease in the stock price of firms, especially for firm commitments. For example, [START_REF] Asquith | Equity Issues and Offering Dilution[END_REF] and [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF] show that share prices of industrial issuers decrease by 3% over the twoday announcement period. 11 In other countries, less evidence exists on the valuation effect of equity issues announcements. In Japan, for instance, [START_REF] Kang | How Different is Japanese Corporate Finance? An Investigation of the Information Content of New Equity Issues[END_REF] report a significantly positive reaction of 0.45% on the announcement of public offerings. In most European countries, empirical studies on issue announcements find positive or insignificant negative market reactions, e.g., +1.55% (standby rights) and +0.23% but insignificant (uninsured rights) in Norway [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF] and +0.64% for rights issues for non financial firms in Germany [START_REF] Gebhardt | Explaining Capital Market Reactions to Equity Offers by German Companies[END_REF]. According to [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF], there is a negative announcement effect for British rights offerings (-2.9%), but a positive effect (+3.3%)

for placings, a distinct offering method with few similarities to U.S. firm commitments.

These different findings seem puzzling. We shall try to explain them by examining the importance of bank certification and corporate control.

Event-study methodology

A standard event-study is performed in order to measure the average impact on

French stock prices of seasoned equity offering announcements, where day 0 is the announcement date. If R it is the observed logarithmic return for security i and R mt the market index return at date t , 12 the excess return can be calculated by the difference between R it and a benchmark period return N it , which corresponds to a stock's normal daily return in the absence of any event. Three benchmark returns are used: the market index return, the stock's mean return measured over an estimation period prior to the event period and the market-adjusted stock return. The parameters 13 are estimated over event days -220 through -21 days before the announcement ( ) t = 0 . The crosssectional mean excess return ( ) RAM t is then calculated for each event date over 40 days around the announcement date. In order to know if mean excess returns are significantly different from 0, the null hypothesis ( :

) H RAM t 0 0 = is tested.
Two parametric tests are 12 The market index return used is the SBF (Société des Bourses Françaises) index that is calculated over the 250 most liquid securities in the Paris market. The index return takes into account the reinvestment of dividends. 13 In the case of the market-adjusted return, the coefficients are estimated by using the OLS values over the estimation period. However, because of non-synchronous trading, OLS estimates are inconsistent. [START_REF] Dimson | Risk Measurement when Shares are Subject to Infrequent Trading[END_REF] proposed a methodology that takes this bias into account. [START_REF] Scholes | Estimating Betas from Non-Synchronous Data[END_REF] and [START_REF] Fowler | Risk Measurement when Shares are Subject to Infrequent Trading, Comment[END_REF] have also developed estimates that take return autocorrelations into account. These estimates are calculated by considering two lags and two leads.

reported. 14 The first is based on a statistic obtained by dividing the mean excess return by a time-series standard deviation.

( ) ( )

T RAM RAM where RAM RAM RAM tps t t = = - ⎛ ⎝ ⎜ ⎞ ⎠ ⎟ =- -∑ =- -∑ σ σ τ τ τ 1 199 1 200 21 220 2 21 220
.

(1)

The second statistic we use is obtained by dividing the mean excess return by a crosssectional standard deviation.

( )

( ) ( ). 1 1 1 2 ∑ = - - = = N i t it t t t trans RAM RA N RAM where RAM RAM N T σ σ (2)

Time-line of important dates

The first announcement date considered is the Board Meeting date when the firm decides to issue equity. At this date, insider trading is possible. The first public announcement of the offering generally comes in the registration statement filed with the COB. No newspapers in France cover equity issues, unlike US financial press.

However, we had access to information in the database of the "Européenne des données," which includes all Agence France Presse (AFP) announcements and those of the main French financial newspapers. As a matter of fact, offering announcements by the AFP often take place the day before publication in the financial dailies. Most previous studies of securities issues in France analyse the wealth effect at the BALO date, which is the legal announcement date.

The " Européenne des données " date (EDD) corresponds to the first mention of the offerings in the press. The EDD date is taken into account only if it is earlier than the COB date and if the announcement contains the main characteristics of the issue (flotation method, size and offer price). Thus, in our study, the announcement date is the earlier of the EDD and the COB dates. 15 In the case of rights issues, there is a required period of seven calendar days between the BALO date and the issue date. In the case of public offerings, there is no legal period. The issue date is then frequently the same as the BALO date, or even for a few offerings the day before. When there is a priority period (which is the case for 16 out of the 22 public offerings), the subscription period is at least ten days. Figure 1 reports the time-line for these dates. Table 5 reports the characteristics of these different dates in our sample.

[Insert figure 1] [Insert table 5]

However, as the normality of daily returns is unproved, a sign test is also used. 15 We calculated the average announcement effects for each data source separately, and checked that they were not significantly different from one another.

Valuation effect on the first announcement date (AD)

The event study is undertaken around two dates (Board Meeting date and the earlier of the COB and the EDD dates). No stock price adjustment was detected at the Board Meeting date for any of our samples. This date is not usually considered as an informative event date. However, [START_REF] Cooney | Underwriter Certification and Japanese Seasoned Equity Issues[END_REF] use it to study the impact of Japanese equity offering announcements, and find a significantly positive stock price reaction on this date. The lack of price impact at the board meeting date in France may reflect the fact that the offering information does not have to be released before the legal announcements. The COB agreement date seems to be a better announcement date because the information becomes public on this date at the Latest.

However, the COB agreement date does not necessarily correspond to the date when the information is released. If the offer is first announced through the " Européenne des données ", the EDD date is selected as the date of announcement, otherwise the COB date is chosen for the first date of announcement. The tombstones are published in the newspapers only after publication in BALO and refer to the BALO date. Stock price reactions around announcement dates are reported in table 6. 16

[Insert table 6]

Table 6 reports the cumulative mean excess return 17 for the two-day event window (0,1) where 0 is the announcement date of the offering, for the full sample and 16 Over the period studied in this article, there were no issue cancellations after their announcement. 17 Only the abnormal returns estimated with [START_REF] Dimson | Risk Measurement when Shares are Subject to Infrequent Trading[END_REF] method are put forward. The other results based on the market model (OLS estimates), the index return, and the mean return lead to similar conclusions. Only the test based on a time-series standard deviation is shown. The test based on the cross-sectional standard deviation and the non-parametric test lead to similar results.

for the sub-period 1990-1996. For the 1986-1996 period, we find a significant two-day average excess return of -0.74% for standby rights issues and -1.11% for uninsured rights. 18 Public offerings generate an insignificant and much smaller negative return.

When we look at the more recent 1990-1996 period, we find a significant two-day average excess return of -1.28% for standby rights issues, of -2.84% for uninsured rights, and an insignificant negative return for public offerings.

Due to the small size of the sample of public offerings, table 6 does not distinguish between the issues with and without a priority subscription period for existing shareholders. All uninsured public offerings contain a priority period. Among the 18 underwritten public offerings, 12 have a priority period. We checked that the abnormal return at the announcement does not differ according to whether or not a priority period exists.

Our results for standby rights are comparable to the returns reported in the U.S.

by [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF], -1.03%, or Singh (1997) of -1.07% and in Norway by [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF], -0.23%, but less unfavourable than the results reported by [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF] in the U.K. (-2.9%). For uninsured rights, we find a more negative price reaction, which appears at variance from the [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF] prediction that undervalued firms select uninsured rights 19 . We find an insignificant negative wealth effect at the announcement of an underwritten public offering, which differs from the -3%, reported in the U.S. studies.

The characteristics of the French underwritten public offerings help to explain our results. In the [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF] model, the underwriters can only partially 18 We examine how rights offers differ between cases with blockholder guarantees and those without. We find that the abnormal return on the announcement date is not significantly different with or without blockholder guarantees. 19 However, the institutional details of the French flotation methods are not exactly the same as in the U.S.

certify the firms' quality, which allows for adverse selection effects. However, if the underwriter is viewed by the issuer and the market as effective in terms of detecting overpriced issues, as argued in [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF], underwritten offerings may have a significantly positive selection effect or at least a non negative effect. Several studies support a certification role for underwriters.

One of the key features of an underwriting contract is the method of determining the offer price. In the U.S. firm commitments, offer prices are set after the initial announcement, usually just before the stock issue is sold to investors. In other countries, the offer price is set several days before the issue date. Lengthening the time period between the determination of the offer price and the issue date increases the likelihood of a decline in stock price and the risk borne by the underwriters. They will only underwrite an offering if they estimate that the true value of the stock is significantly higher than the offer price. 20 An announcement of an underwritten offering can therefore be accompanied by a positive or non-negative price reaction. [START_REF] Cooney | Underwriter Certification and Japanese Seasoned Equity Issues[END_REF] report that Japanese firms choose between two variants of firm commitment contracts. The first is the fixed-price offering, in which the offer price is determined several days before the beginning of the issue. This contract provides a high level of certification and elicits a positive abnormal return on the announcement date. The second contract, the formula-price offering, provides a lower level of certification and results in an insignificant price reaction. In the U.K. placing contract, the offer price is also set at the initial announcement. [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF] find a significantly positive excess return, and explain this by the high level of certification provided by the placing contract.

French underwritten public offerings are also fixed-price contracts. Further, there is a regulatory constraint that requires setting the offer price at least at the average of ten consecutive daily stock prices chosen from the twenty daily prices preceding the issue date. We argue that, like Japanese firm commitments or U.K. placings, French underwritten public offerings are characterised by strong underwriter certification and monitoring that may reduce the adverse selection effect of equity offerings and explain the non negative wealth effect.

Average abnormal returns on the issue date (ID)

To investigate the price reaction at the beginning of the subscription period, we select the first day of issue and the following twenty days. We can safely assume that it is during this period that stockholders in a rights offering decide whether to exercise or to sell their rights. From table 7, we see that the market reaction at the seasoned equity issue date is significantly negative. Most studies find insignificant returns on the issue date for public offerings (see [START_REF] Asquith | Equity Issues and Offering Dilution[END_REF]Mullins, 1986 or Eckbo and[START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF].

However, [START_REF] Hansen | The Demise of the Rights Issue[END_REF], [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF], [START_REF] Kang | How Different is Japanese Corporate Finance? An Investigation of the Information Content of New Equity Issues[END_REF] and Singh (1997) find significant negative returns during the rights offer subscription period.

In an efficient market, prices should take into account all the information available the day the offering is announced. Price changes on the issue day are not the result of new information. However, according to some authors [START_REF] Mikkelson | Withdrawn Security Offerings[END_REF] or Korajczyck, [START_REF] Korajczyk | Equity Issues with Time-Varying Asymmetric Information[END_REF], since the issue can be withdrawn after the announcement, not withdrawing it indicates that the stock remains overvalued despite the negative reaction following the announcement. In France, over the 1986-1996 period, no offerings were cancelled after registration; consequently, it seems that this explanation is not empirically important.

The other explanations suggested focus on current stockholder and investor behaviour on the completion date. According to [START_REF] Lease | An Investigation of Market Microstructure Impacts on Event Study Returns[END_REF], as investors buy stock in the primary market, sellers will exceed buyers in the secondary market, bringing prices down at least to the extent of the bid-ask spread. The results presented in table 7 show a negative reaction around the issue date for rights issues. The extent of the negative reactions around the issue date are very similar to the results of Singh (1997) (-2.18% over (-1; +5)) for an underwritten rights issue sample. During the first days after the beginning of the subscription period, current shareholders have to decide whether to exercise or sell their rights. If they are averse to risk, shareholders who want to sell their rights will do so as soon as possible, as long as rights are in the money. Investors who buy the rights will buy stock in the primary market rather than in the secondary market, bringing secondary market prices down. Furthermore, standby underwriters, who have to buy all remaining shares at the end of the subscription period, are allowed to buy rights in the secondary market and to short-sell the stock to hedge their standby risk exposure. This arbitrage activity may also explain the negative price reaction for rights offerings.

Several previous studies show insignificant results for public offerings on the issue date. We find a significant negative abnormal reaction during the days after the beginning of the public offering subscription period. In the French context, current shareholders may often subscribe first during a priority period and public offerings are underwritten through standby contracts. We show that the expected shareholder take-up is low for public offerings. Current shareholders do not subscribe heavily, and outside investors can buy shares in the primary market rather than in the secondary market, bringing the stock prices down. We should bear in mind that current shareholders have a priority subscription period, but when the main shareholders' take-up is low, outside investors may also subscribe immediately: issuers rely on information from blockholders concerning their subscription plans to offer part of the issue to investors immediatly. This may explain the similar results for rights and public issues around the issue date.

Cross-sectional analysis of the announcement effect

A cross-sectional analysis is undertaken in order to explain the magnitude of mean abnormal returns. This analysis makes it possible to observe differences between public issues and rights issues around the date of announcement. The dependant variable is the two-day excess return at the announcement of equity offerings. Several continuous and qualitative variables are included in our analysis.

Variable definitions

The continuous variables are defined by the size of the offering, measured by the natural logarithm of the gross proceeds (GP), the percentage of the issue offered to external investors (EXT), the abnormal performance of the stock over 200 days prior to the announcement of the issue (PERF) and a variable that measures the proportion of renouncements by blockholders when the firm is closely held (ACTREN). ACTREN is equal to the product of ACT and REN. ACT is equal to 1 if the main shareholder has at least 50% of the firm. REN is defined as: . This variable is equal to zero if all the blockholders subscribe to their share allocation. It is positive if some blockholders renounce their allocation: the proportion of the capital that they own decreases after the equity offering. The variable REN increases in proportion to renouncements by blockholders, but also, if there are some renouncements, to the relative size of the issue.

The qualitative variables included in the model are defined by dummy variables that are equal to one, if the offering is a rights issue (RIG), if the offer is underwritten (GARD), if the offering takes place in the later part of the sample period (1990)(1991)(1992)(1993)(1994)(1995)(1996) (PERIOD), if the firm is issuing shares in order to acquire another firm or to invest in a specified project (USE). 21 Several other variables were tested but are not reported because of their lack of statistical significance. The subscription price discount has no effect on the wealth effect at the announcement of the offering in France for the total sample, nor for the rights issues sample. This result is similar to the findings of [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF] in the U.S. and those of [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF] in Norway. It does not concur with [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF], who find that the subscription price discount negatively affects the price reaction in the U.K. The other variables, not reported here, are the shareholder guarantee indicator, the stock beta, the stock return standard deviation, the stock residual standard deviation, the size of the issue relative to shares outstanding, the nature of control and the stock's market listing. Results are given in table 8 for the total sample of 219 equity offerings.

[Insert table 8]

Flotation method and offering size

The indicator variable RIG has a significant negative coefficient. The difference in the market reaction to rights issues and to public offerings is statistically significant after checking for issue characteristics. The announcement effect is greater for rights issues than for public offerings. We confirm the results of our previous section: the differences in announcement price reactions between the two flotation methods are not only due to differences in issue characteristics. Furthermore, the estimated coefficient for the underwriting indicator variable GARD is significantly positive at the 10% level.

Whatever the issuing method, the market reaction is more positive when the offering is underwritten.

The size of the offering has a significantly negative coefficient, indicating a size effect in abnormal returns. The size effect is consistent with a price pressure hypothesis, but also with information-based explanations. Presumably, the more overvalued the equity, the larger the incentive to issue a greater amount of shares. The size effect could also be consistent with a moral hazard / free cash flow hypothesis. This hypothesis is all the more valid as the gross proceeds increases and the use of proceeds is undefined.

Prior performance

The stock runup over 200 days prior to the announcement of the issue, PERF, has a significant negative coefficient, suggesting that the adverse selection effects are more pronounced when the abnormal performance prior to the offering announcement is higher. [START_REF] Asquith | Equity Issues and Offering Dilution[END_REF] document positive abnormal returns in the elevenmonth pre-issue period, which are positively correlated to abnormal returns on the announcement date. [START_REF] Masulis | Seasoned Equity Offerings: an Empirical Investigation[END_REF] find a negative relation with a threemonth prior period. Korajczyck et al. (1990) find a negative relation with a short prior period and a positive relation with a long prior period, while [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF] find a negative relation with a 40-day prior period. Our results are consistent with the [START_REF] Lucas | Equity Issues and Stock Price Dynamics[END_REF] model: overvalued firms issue equity as soon as the opportunity arises, while undervalued firms postpone the equity issue until the stock price is higher. Thus, on average, the price path prior to the offering for all equity issuers will slope upwards, and the stock price will drop at the issue announcement.

According to table 2, no significant difference appears between underwritten public offerings and standby rights issues in terms of prior performance. Furthermore, the regressions in table 8 show that even after checking for prior performance, public offerings result in a more negative abnormal announcement return. This evidence cannot be explained by the preference of investment bankers for less risky issues, which have not recently experienced a large share price run-up. 22

Period and use of the funds

The market reaction becomes more negative during the second period of our study (1990)(1991)(1992)(1993)(1994)(1995)(1996). Since 1985, the French market has been gradually deregulated. Bank privatisation in 1986-1987 and the arrival of foreign banks induced more competition in the financial sector. Further, the importance of foreign pension funds in raising capital for French firms grew drastically over the full period of our study. Overall, during this period, French firms have become more aware of the necessity of corporate value enhancement, and the market has reacted more rapidly and strongly to negative announcements.

The significant positive value for the coefficient on USE indicates that the simultaneous announcement of the issue purpose (investment or acquisition) reduces information asymmetry between the firm and the investors and therefore the adverse selection borne by investors. The market reaction is about 1% more positive when the funds are used to acquire another firm or to invest in a specific project (as compared to debt reduction or no indication). This is consistent with a lower moral hazard problem stemming from increasing management's discretionary investment capabilities.

According to Mikkelson and Partch (1986), the use of the proceeds has a small effect on price reaction for U.S. firm commitments. [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF] find a significantly less negative reaction when the proceeds are used for acquisitions only in the case of insured rights issues.

At first glance, the average announcement pattern documented here could be explained by the fact that public offerings are more frequently associated with positive investment announcements, which could partially offset the negative share price effect of the equity announcement. Nevertheless, 61.93% of the rights offerings are associated with a specified use of proceeds (12.69% acquisition and 49.24% investment) compared to 54.55% for the public offerings (9.09% acquisition and 45.45% investment).

Therefore, the use of proceeds cannot really explain the different reactions observed at the time of announcement of the issues. 22 Chen and Ritter (2000) document a clustering of IPO spreads at 7% whatever the risk of the offering.

Investment banks could therefore restrict themselves to less risky issues. But these authors show that for SEOs, there is considerable dispersion in the spreads paid on different deals, depending on their

Ownership structure

We explore the effects of ownership structure and blockholder rights renouncements on the price reaction at the announcement of an equity offering in

France. We find that the share price effect is negatively related to the percentage of the issue offered to outside investors (variable EXT). This result is consistent with results

found by [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF]: the adverse selection effect grows with the fraction of the issue offered to external investors. Nevertheless, the initial part of a subscription by external investors can be increased if blockholders renounce their allocation. Our evidence shows that blockholder take-up renouncements when the firm is closely held have a positive effect on the share price response (variable ACTREN, table 8). 23 We report the results for the two sub-samples according to the existence of a controlling shareholder (who owns more than 50%) (see table 9).

[Insert table 9]

When the main shareholder owns less than 50% of the capital of the firm, the variable REN has a significantly negative impact on the price reaction on the announcement of the SEO. In this case, our results are consistent with the [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF] model. Adverse selection increases when blockholders renounce their allocation. But when the main shareholder owns at least 50% of the capital, the variable REN has a significantly positive impact on the price reaction. Blockholder characteristics. We cannot explain our results by the choice by investment banks for public offerings of less risky firms. 23 We obtain similar results with other measures of blockholder renouncement when we consider a subsample of firms that are closely held.

renouncements enhance value by increasing ownership dispersion. Value enhancement may be due to increased liquidity, to better incentives by outside investors to monitor or attenuate conflicts between majority and minority shareholders. It is also interesting to note that the size effect, which is consistent with a moral hazard / free cash flow hypothesis, disappears in the case of majority-controlled firms. The variable PERF has a significant negative coefficient only in the case of majority-controlled firms. The adverse selection effects are more pronounced when there is a controlling shareholder and when abnormal performance prior to the offering announcement is higher. Firms that are not closely held by a controlling shareholder are less subject to adverse selection.

As pointed out by [START_REF] Holmström | Market Liquidity and Performance Monitoring[END_REF], concentrated ownership reduces monitoring of the firm by stock market participants, thereby reducing the amount of public information available about the firm. This rise in concentration, in turn, could increase bid-ask spreads. For instance, [START_REF] Heflin | Blockholder Ownership and Market Liquidity[END_REF] find that firms with greater blockholder ownership have larger quoted spread, effective spreads, adverse selection spread component, and smaller quoted depths. They argue that potential benefits from blockholder monitoring might be partially offset by reduced liquidity. [START_REF] Kothare | The Effect of Equity Issues on Ownership Structure and Stock Liquidity: A Comparison of Rights and Public Offerings[END_REF] finds that rights issues are associated with an increase in proportional bid-ask spreads, while public underwritten offerings are followed by a decrease in proportional bid-ask spreads. These results are consistent with the different effects of the two flotation methods on the firm's ownership structure. Rights issues can increase ownership concentration, while public offerings decrease it. [START_REF] Burkart | Large Shareholders, Monitoring, and the Value of the Firm[END_REF] argue that a concentrated ownership structure induces high levels of monitoring and control but makes management less active. Ownership concentration involves a trade-off between control and initiative.

Direct evaluation by a large shareholder may reduce the manager's incentives to exert effort.

Further, the French market is characterised by closely held firms. Majority ownership is relatively common. As [START_REF] Schleifer | A Survey of Corporate Governance[END_REF] suggest, there may be extra costs to concentrated holdings: large investors represent their own interests and may treat themselves preferentially at the expense of other investors and employees, especially if there is a substantial departure from the one-share-one-vote rule. For most firms in France, there is a one-share-two-votes rule when shares are owned on average for more than 2 to 4 years. Johnson et al. (2000) focus on tunnelling, which is the transfer of resources out of a company to its controlling shareholder. Tunnelling includes asset sales and contracts that are advantageous to the controlling shareholder, loan guarantees and expropriation of corporate opportunities, but also insider trading or other financial transactions that discriminate against minorities. Johnson et al (2000) show that tunnelling occurs more frequently in civil law countries, such as France. In these countries, self-dealing transactions, for instance, are assessed in the light of their conformity with statutes, and not on the basis of their fairness to minorities. A growing body of research suggests that civil-law countries are less protective of minority shareholders than are common-law countries (see La [START_REF] Porta | Investor protection and Corporate Governance[END_REF].

Our results show that the favourable ownership dispersion effect offsets the adverse selection effect for firms with an initial concentrated ownership. When the firm is closely held, the announcement of a greater dispersion of share ownership is a favourable information for outside investors, because it will reduce the likelihood of tunnelling and enhance management initiative. Even if the blockholders together still own a large part of the shares, minority shareholders may have enhanced power. For instance, in France, charter amendment decisions require a majority of 66.6% of the voting rights, which is less likely to be reached after an equity offering.

Our evidence can be compared to the results obtained in other countries.

According to [START_REF] Bohren | Why Underwrite Rights Offerings? Some New Evidence[END_REF], the proportion of common stock held by the 20 largest shareholders has no significant effect on the wealth effect in Norway. But they show that the market reacts more favourably to issues for which the proportion of insiders (board members and the CEO) is greater. [START_REF] Slovin | Alternative Flotation Methods, Adverse Selection, and Ownership Structure: Evidence from Seasoned Equity Issuance in the UK[END_REF] find a non-linear relation between price reaction and ownership concentration for placings in the U.K. Firms with greater ownership sustain a more favourable price reaction to placings until ownership concentration reaches 40% of firm shares. For firms with ownership concentration greater than 40%, they find a marginal negative effect. On the other hand, ownership concentration does not affect excess return on insured rights issues in the U.K. According to these authors, U.K. placings entail the sale of the shares to outside investors and lower the ownership concentration. These results are comparable to ours.

In France, the percentage of blockholder renouncements is significantly larger for underwritten public offerings compared to other flotation methods. Two simultaneous positive effects can be observed for public offerings: lower costs of concentrated ownership, and strong underwriter certification. These effects may compensate for the adverse selection effect and may explain the non-negative wealth effect on the announcement of a public offering. They also help to understand why a growing proportion of French firms choose to issue shares through the public offering method despite its high flotation costs.

Summary and conclusions

This paper provides new evidence on the choice of equity flotation method. In France, as in most European countries, a rights issue is the primary flotation method.

Our results show that the direct flotation costs of rights issues are significantly lower than the costs of public offerings. The equity financing paradox is confirmed in France:

a growing proportion of French firms issuing common stocks choose the relatively expensive public offering method, rather than the rights method.

We find that the abnormal returns around the announcement dates are significantly negative for rights issues, whether of uninsured or standby rights, and negative, but not significantly so, for public offerings. The market reaction is significantly more negative for rights issues when checks are made for the other issuing characteristics. In the French market, the price of public offerings is set several days before the beginning of the issue, and the risk borne by the underwriters is therefore larger than the risk of U.S. firm commitments. These characteristics induce strong underwriter certification and monitoring that may reduce the adverse selection effect of equity offerings and explain the non-negative wealth effect.

We find a significant negative size effect, consistent with a price pressure hypothesis. The price reaction is negatively related to the stock price performance prior to the offering announcement. The market reaction is more positive when the funds are used for an acquisition or an investment, which is consistent with a lower adverse selection effect.

We explore the effects of ownership structure and blockholder renouncements on the price reaction at the announcement of an equity offering. We show that for firms without a controlling shareholder, the adverse selection effect increases with the fraction of the issue not taken up by current shareholders, as predicted by [START_REF] Eckbo | Adverse Selection and the Rights Offer Paradox[END_REF]. But for closely controlled firms, our evidence shows that blockholder take-up renouncements have a positive effect on the share price response. Blockholder renouncements imply lower shareholder concentration. This lower concentration enhances value by attenuating conflicts between majority and minority shareholders and, in particular,by reducing the likelihood of tunnelling. The favourable ownership dispersion effect mitigates the adverse selection effect for firms with an initialy large concentrated ownership. Finally, the larger flotation costs associated with public offerings in France may be offset by the less negative wealth effect at the announcement of the issue. This result helps to understand why a growing proportion of French firms are choosing the public offering method. e. Public gross proceeds is the part of the gross proceeds that is not taken up by the shareholders owning more than 5% of the shares. Note: This table presents the cross-sectional regression model explaining the two-day cumulative excess returns on announcement of seasoned equity offerings in France from 1986 to 1996. The event date is the first announcement date between EDD and COB. The dependant variable is the two-day cumulative excess return from the announcement. The least squares regression models are developed, using hypothesis tests based on consistent estimates of covariance matrices allowing for heteroskedasticity, as in [START_REF] White | A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity[END_REF]. *, **, *** denote significance of the test at the 0.1, 0.05 and 0.01 levels respectively: t-statistics are in brackets.

The continuous variables are the following: -Ln(GP) is the logarithm of the gross proceeds ; -EXT is the percentage of the issue not taken up by blockholders; -PERF designates the long-run abnormal performance of the firm over 200 days prior to the announcement of the issue; -ACTREN is equal to the product of ACT and REN. ACT is equal to 1 if the main shareholder has at least 50% of the firm. REN is defined by: rsbefore blockholde rsafter blockholde rsbefore blockholde Ren -= .

The qualitative variables are as follows: -RIG is an indicator value that has a value of 1 if the offer is a rights issue ; -GARD is a dummy variable that equals one when the offer is underwritten; -PERIOD is a dummy variable that equals one when the offering takes place in the second period (1990)(1991)(1992)(1993)(1994)(1995)(1996); -USE is an indicator value that equals 1 if the firm issues shares in order to acquire another firm or to invest in a specified project. Note: This table presents the cross-sectional regression model explaining the two-day cumulative excess returns on announcement of seasoned equity offerings in France from 1986 to 1996. The event date is the first announcement date between EDD and COB. The dependant variable is the two-day cumulative excess return from the announcement. The least squares regression models are developed, using hypothesis tests based on consistent estimates of covariance matrices allowing for heteroskedasticity, as in [START_REF] White | A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity[END_REF]. *, **, *** denote significance of the test at the 0.1, 0.05 and 0.01 levels respectively: t-statistics are in brackets. Firms with a first shareholder who owns more than 50% of the capital are designated as majority-controlled firms.

The continuous variables are as follows: -Ln(GP) is the logarithm of the gross proceeds ; -PERF designates the long-run abnormal performance of the firm over 200 days prior to the announcement of the issue; -REN is defined by: rsbefore blockholde rsafter blockholde rsbefore blockholde Ren -= .

The qualitative variable is as follows: -PERIOD is a dummy variable that equals one when the offering takes place in the second period (1990)(1991)(1992)(1993)(1994)(1995)(1996);

  Note:The event date is the first date of announcement (either EDD or COB) of seasoned equity offerings by French firms over the 1986-1996 period. Similar results have been found when considering each of the two dates separately. The mean excess returns, calculated by using Dimson's method, are cumulated over the period from 0 to 1 day and from 0 to 5 days. The parametric tests are the tests calculated over the cumulative mean abnormal returns, TC tps . Let nbj be the number of cumulative abnormal returns, RAMC the cumulative mean abnormal return over nbj days, ( ) **, *** denote significance of the test at the 0.1, 0.05 and 0.01 levels respectively.

  *, *** denote significance of the test at the 0.1, 0.05 and 0.01 levels respectively.

  Figure 1 -Time-line of dates used in seasoned equity issues in FranceThis figure shows the different dates of the process of seasoned equity issues in France, from the Board Meeting decision (CA) to the issue date (ID). The BALO date (BD) is the legal date of announcement. The first institutional announcement of offering information generally comes in the registration statement filed with the COB (CD). The " Européenne des données " date (EDD) corresponds to the first mention of the offerings in the press.

	Board Meeting	" Européenne des données " Visa COB	BALO	Issue
	CA	EDD	CD	BD	ID
	Note:

Table 1 -

 1 Equity issues in France from 1986[START_REF] Kang | How Different is Japanese Corporate Finance? An Investigation of the Information Content of New Equity Issues[END_REF] The data are from COB annual reports. Uninsured rights are rights offerings without bank standby underwriting. Public offerings are seasoned equity issues without rights.

	Year	Uninsured Rights Rights with standby	Public offerings	Total
			underwriting
	1986	11	29	3	43
	1987	11	25	2	38
	1988	4	10	0	14
	1989	10	18	1	29
	1990	8	15	3	26
	1991	6	17	8	31
	1992	1	2	2	5
	1993	0	3	1	4
	1994	5	12	1	18
	1995	0	2	0	2
	1996	1	7	1	9
	Total	57	140	22	219
	Note:

Table 2 -

 2 Mean (median) characteristics of 219 equity issues on the French Stock Exchange from 1986 to 1996 . The ratio of subscription price over common stock price is measured by using the price of the stock just before the first date of announcement of the issue.b. The market value of equity is measured by multiplying the stock price just before the announcement of the issue by the number of shares available on that date. c. The percentage of change in the number of shares is calculated by

	Uninsured	Standby rights	Uninsured public offerings	Underwritten	All offers
	rights	offerings		public offerings

a

Table 3 -

 3 Mean (median) share ownership, precommitments and characteristics of blockholder take-up renouncements Blockholders are the shareholders whose names are included in the registration statement filed with the COB (shareholders who own more than 5% of the shares). The means and medians of the percentage of shareholder guarantee exclude firms with zero shareholder guarantee. The means and medians of share allocation not taken up by blockholders exclude firms with zero blockholder renouncements.

	Uninsured	Standby rights	Uninsured	Underwritten	All offers
	rights	offerings	public offerings	public offerings

Note:

Table 5 -

 5 Calendar of operations

		Interval	Uninsured	Standby	Uninsured	Underwritten	All offers
			rights	rights	public	public
				offerings	offerings	offerings
	EDD->BD	6.1 (10.19)	7.09 (12.28)	2.5 (0.5)	14.13 (17.04)	9.81 (25.65)
			[0]	[1]	[2]	[3]	[1]
	CA->CD	14.61 (20.66)	11.09 (20.92)	2.25 (2.28)	5.67 (13.55)	11.39 (20.31)
			[9]	[5]	[1]	[1]	[4]
	COB->BD	4.79 (2.97)	4.87 (7.63)	3.5 (1.12)	3.61 (2.11)	4.72 (6.33)
			[4]	[3]	[3]	[3]	[3]
	COB-> ID	9.6 (3.4)	9.81 (7.75)	3.5 (1.12)	4.44 (3.74)	9.2 (6.73)
			[8]	[8]	[3]	[3]	[8]
	Balo->ID	4.81 (1.59)	4.94 (1.16)	0 (0)	1.19 (2.86)	4.54 (1.86)
			[5]	[5]	[0]	[0]	[5]
	ID ->END	15.27 (2.52)	14.85 (3.21)	11.5 (5.02)	7.53 (4.75)	14.31 (3.84)
			[15]	[15]	[9]	[9]	[15]
	Notes: Figures are trading days. They represent the means, the standard deviations (in parentheses) and the
		medians (in brackets) of the number of trading days between the two dates indicated in the left-hand
		column:
	-	from The " Européenne des données " date (EDD) (first mention of an offering in the press) to the BALO
		date (BD) (the legal date of announcement) ;
	-	from the Board Meeting decision (CA) to the BALO date (BD);
	-	the first institutional announcement of offering information that generally comes in the registration
		statement filed with the COB (CD) to the issue date (ID);
	-	from the BALO date (BD) to the issue date (ID);
	-	from the issue date (ID) to the end of the subscription period (END);

Table 6 -

 6 Price impact on the announcement date

		Sample	Two-day	Test	Five-day	Test
		size	return		return
	Panel A. 1986-1996 period
	Rights offerings
	Uninsured rights	57	-1.11%***	-2.96	-1.73%***	-2.68
	Standby rights	140	-0.74%**	-2.07	-1.1%*	-1.78
	Public offerings
	All public offerings	22	-0.42%	-0.62	-1.44%	-1.23
	Underwritten public offerings	18	-0.33%	-0.43	-1.35%	-1.02
	Panel B. 1990-1996 period
	Rights offerings
	Uninsured rights	20	-2.84%***	-4.47	-2.58%**	-2.35
	Standby rights	57	-1.28%***	-3.51	-1.44%**	-2.28
	Public offerings
	All public offerings	16	-0.33%	-0.46	-1.2%	-0.97
	Underwritten public offerings	12	-0.17%	-0.2	-0.98%	-0.66

Table 7 -

 7 Price impact on the issue date : The event date is the offering date of seasoned equity offerings by French firms over the 1986-1996 period. The mean excess returns, calculated by using Dimson's method, are cumulated over the period from 0 to 1 day, from 0 to 5 days and from 0 to 20 days. The parametric tests represent the tests calculated over the cumulative mean abnormal returns, TC tps . Let nbj be the number of cumulative abnormal returns, RAMC the cumulative mean abnormal return over nbj days, ( )

		Sample	Two-day	Test Five-day	Test	Twenty-day	Test
		size	return		return		return
	Rights offerings
	Uninsured rights	57	-0.59%*	-1.64	-2.6%***	-4.14	-5.92%***	-5.04
	Standby rights	140	-0.33%	-0.96	-1.56%***	-2.61	-4.06%***	-3.62
	Public offerings
	All public offerings	22	-1.18%**	-2	-1.86%*	-1.82	-5.76%***	-3.01
	Underwritten public offerings	18	-1.2%*	-1.76	-1.39%	-1.18	-6.1%***	-2.77

Note

RAM

σ the timeseries standard-deviation over the estimation period ;

Table 9 -

 9 Cross-sectional regression model on the announcement date for two subsamples of seasoned equity offerings

	Variable	Panel A	Panel B
		Majority-	Other firms
		controlled
		firms
	Constant	0.0221 [2.09]**	0.0305 [2.55]**
	Ln(GP)	-0.0023 [-1.24]	-0.006 [-2.66]***
	PERIOD	-0.0167 [-2.65]***	-0.0169 [-1.75]*
	PERF	-0.0281 [-4.21]***	-0.0229 [-1.41]
	REN	0.041 [2.23]**	-0.1224 [-1.79]*
	Adj R²	0.122	0.105

This proportion is even larger and reaches about 50% when we consider the period 1997-1999, which is not included in our sample. During the whole period, the public offering flotation method was often chosen by French firms for their issues of units of common stocks and warrants. These issues are not included in the study, because they behave differently.

We call blockholders all the shareholders who hold more than

5% of the shares at the date of the issue and whose name is given in the COB registration prospectus.

A controlling shareholder is a shareholder who holds more than 50% of the shares on the date of the issue.

The COB (Commission des Opérations de Bourse) plays the same role as the SEC in the US.

French firms quite often announce equity issues at the same time, or immediately after earnings publications. This evidence is consistent with[START_REF] Korajczyk | The Effect of Information Releases on the Pricing and Timing of Equity Issues[END_REF], who find that equity issues follow shortly after earnings publications.

For instance, suppose that blockholders hold 60% of the shares and decide to subscribe to 50% of their subscription rights. If the percentage of change in shares is 25%, then blockholders still own 52.5% of the shares after the equity offering.

Due to specifically French regulation contraints, the offer price cannot be set significantly below the stock price, and very large underwriting fees are uncommon in France.

We appreciate the helpful comments from Espen Eckbo and an anonymous referee. Research support from the CNRS (Centre National de la Recherche Scientifique) under grant is also gratefully acknowledged.

Note: The dependant variable is the total cost of the issue divided by the gross proceeds (GP), in percentage. RIG = Indicator value of 1 if it is a rights issue. Ln(GP) designates the size of the issue (logarithm of the gross proceeds). GAR = underwritten percentage of the offer. EXT is the percentage of the issue not taken up by blockholders. PERIOD is a dummy variable that equals one when the offering takes place in the second period (1990)(1991)(1992)(1993)(1994)(1995)(1996), and zero otherwise. *, **, *** denote significance of the test at the 0.1, 0.05 and 0.01 levels respectively. Tests in brackets are based on [START_REF] White | A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity[END_REF] heteroskedastic consistent variance covariance matrices.


L Bossuet
email: lilian.bossuet@univ-st-etienne.fr

V Fischer

P Bayon

Contactless Transmission of Intellectual Property Data to Protect FPGA Designs

Keywords: IP protection, side channel, electromagnetic emanation analysis

Contactless transmission of intellectual property data to protect FPGA designs

L Bossuet, V Fischer, P Bayon

I. INTRODUCTION

For digital circuit design the re-use of embedded intellectual properties (IP) is more and more important due to prohibitive cost of ASIC design. Nevertheless the IP business suffers from a lack a security due to the intrinsic form of IPs sales and exchanges. Many dedicated threats target the IP life cycle and result to revenues losses for the IP designers [START_REF] Colombier | Survey of hardware protection of design data for integrated circuits and intellectual properties[END_REF]. The IP threat model includes illegal re-use, illegal sales, cloning (illegal copy) of the IP. The extent of threats targeting IPs is linked to the type of IP: software IPs (typically hardware description language files), firmware IPs (synthesized netlist), and hardware IPs (FPGA bitstream or physical layout).

One of the solutions for the IP designers to protect their intellectual property is to be able to detect the presence of a copy of an IP embedded in a digital device by using IP identification. Works on IP watermarking and IP fingerprinting try to provide the IP identification service. But, most of the time the published solutions are not practical mainly because of the complexity of the watermarking/fingerprinting verification scheme [START_REF] Marchand | IP watermark verification based on power consumption analysis[END_REF]. Efficient IP identification scheme needs to be contactless, rapid and ultra-lightweight. Up to now, these three characteristics are not available in the state-of-the-art. To meet these requirements, in this paper we propose an ultra-lightweight binary frequency shift keying (BFSK) transmitter to forward IP identity (that could generated for example by a feedback shift-register or a physical unclonable function [START_REF] Colombier | Survey of hardware protection of design data for integrated circuits and intellectual properties[END_REF]) discreetly using an electromagnetic channel. Such circuit is usually called "spy circuitry". Using the electromagnetic channel, it is possible to contactless check the presence of an IP inside a digital device.

The rest of this paper is organized as follows. In Section 2, we present related works. In Section 3, we detail the proposed electromagnetic communication of data (i.e. IC/IP information). In Section 4, we present a method to analyze the electromagnetic spectrum to BFSK signal demodulation. In Section 5, we compare published spy circuitries that use a side-channel for IP protection and hardware Trojans. In Section 6, we present two industrial scenarios for the use of the proposed IP protection scheme and in Section 7 we present our conclusions.

II. RELATED WORK

Well-known threat in cryptographic engineering is side channel attacks [START_REF] Kocher | Differential Power Analysis[END_REF], [START_REF] Kamoun | Experimental Implementation of 2ODPA attacks on AES design with flash-based FPGA Technology[END_REF]. Most of the dynamic characteristics of both hardware and software implementations of cryptographic primitives can be used for side channel analysis: computation time, power consumption, electromagnetic radiation, optical radiation, even the sound produced during computation. These side channels can be used as transmission channels to send intellectual property data from a device or an embedded IP. For example in [START_REF] Marsh | Protecting designs with a passive thermal tag[END_REF], the thermal channel representing a contactless communication was used to transfer information from an embedded tag to a remote receiver. However the embedded thermal tag used in this commercial solution requires a relatively large area (255 Spartan-3 slices). In [START_REF] Ziener | Power Signature Watermarking of IP Cores for FPGAs[END_REF], the authors propose using two shift registers to generate a recognizable signature-dependent power consumption pattern to reveal the IP signature. Power consumption was also used in [START_REF] Becker | Side-channel based watermarks for integrated circuits[END_REF] to communicate the IP identity. To reinforce such work, the authors of [START_REF] Kerckhof | Intellectual Property Protection for FPGA Designs with Soft Physical Hash Functions: First Experimental Results[END_REF] propose using the power supply signal of an IP as a physical hash function for fingerprinting.

Related works can be found also in the malicious hardware design such as hardware Trojans. Such systems use side channels to forward secret information such as a symmetric cipher key from cryptographic hardware implementation [START_REF] Lin | Trojan Side-Channels: Lightweight hardware Trojans through Side-Channel Engineering[END_REF], [START_REF] Kutzner | TROJANUS: An Ultra-Lightweight Side-Channel Leakage Generator for FPGAs[END_REF], but also to cause or amplify side-channel leakage of cryptographic hardware [START_REF] Gallais | Hardware Trojans for Inducing or Amplifying Side-Channel Leakage of Cryptographic Software[END_REF].

Expect [START_REF] Marsh | Protecting designs with a passive thermal tag[END_REF], all the related works use power consumption as a communication channel which is not contactless. Unlike the proposed solution, all the related works are not lightweight and rapid as the section 5 of this paper will show.

III. PROPOSED EM COMMUNICATION OF IP DATA

Electromagnetic radiation is an efficient side channel since, unlike measurement of power consumption, electromagnetic radiation can be measured locally. One of the main advantages of this side channel is that it is impossible to hide the leak concerning electromagnetic radiation by using a global countermeasure. Moreover the electromagnetic test bench is not expensive (less than US$ 10K without an oscilloscope, which is the most expensive component). Last but not least, a spectral analysis of the electromagnetic radiation provides information on the oscillating structure such as a ringoscillator [START_REF] Bayon | EM leakage analysis on True Random Number Generator: Frequency and localization retrieval method[END_REF]. For all these reasons, we use the electromagnetic channel for our IP identification scheme. To this end, we designed an ultra-lightweight BFSK transmitter which could be activated outside the device by an ID checker or internally by a specific event (e.g. specific input sequence, internal data value, system state). Note that an enable signal is required to reduce the power consumed by the ring oscillator. Moreover, a permanently activated transmitter could be detected more easily by a spectral analysis of electromagnetic emanations of the device and could also cause local heating and premature aging of the chip.

BFSK is one of the common modulation schemes used in digital communication. The binary data are sent using a sinusoidal carrier at two frequency tones f 0 and f 1 , representing high ('1') and low ('0') logic levels. The binary data arriving at the transmitter input at certain bitrates determine the commutation of the tones at the transmitter output. The proposed BFSK transmitter uses a dedicated configurable ring-oscillator, as shown in Fig. 1. The configurable ringoscillator is designed using one multiplexor, N+K delay elements, and a feedback chain controlled by a NAND gate for activation of transmission to reduce power consumption. Actually, the transmitter is used only during a short time when the enable signal is high, and it consumes power only during this small piece of time. The power consumption of this transmitter is thus completely negligible.

Input data controls the multiplexor, as shown in Fig. 1. When input data is low, the ring oscillator uses N delays and its oscillation frequency is f 0 . When input data is high, the ring oscillator uses N+K delays and its oscillation frequency is f 1 . Since the ring oscillator's oscillation frequency decreases with an increase in the number of delay elements, frequency f 0 is higher than frequency f 1 . These two frequencies have to be selected according to the bandwidth of the electromagnetic analysis platform, which is used to acquire and measure the transmitted signal. The bandwidth of our test bench, which is described in Section 4, was limited to 100 MHz and 1 GHz by the low-noise amplifier.

The proposed BFSK transmitter was implemented in Microsemi FUSION flash based FPGA (130 nm CMOS technology) containing 600K logic gates (M7AFS600). The device contains 13 824 tiles, each tile can be used to implement one D-flip-flop or one configurable multiplexorbased logic block implementing any 3-input logic function.

The configurable number of delays in the ring oscillator of the proposed BFSK transmitter makes it possible to select precisely the two frequencies f 0 and f 1 using parameters N and K. Table I lists the ring oscillator frequencies and the number of Fusion tiles used by the BFSK transmitter for five values of N and K, with N ranging from 0 to 4, and K ranging from 1 to 5. According to Table I, f 0 can be chosen between 119 MHz (N=4) and 385 MHz (N=0) and f 1 can be chosen between 70 MHz (N=4, K=5) and 280 MHz (N=0, K=1). The exact value of f 0 depends on the number of delay elements, but also on the placement and routing of the transmitter. For the values N and K listed in Table I, the frequency variation was less than 1.7% (the maximum frequency deviation in Table I is The number of tiles used by the BFSK transmitter is very low, i.e. from 3 tiles (N=0, K=1) to 11 tiles (N=4, K=5). These values are equivalent to less than 0.022% and less than 0.080% of the total number of tiles included in the targeted 600K-gate FUSION FPGA, respectively. This very small number of tiles is very promising for good dissimulation of the BFSK transmitter inside the sea of gates/tiles. In order to estimate the number of resources needed for implementation with Xilinx SRAM FPGA or Altera SRAM FPGA, Table I gives the number of 4-input look-ups (LUT4) used by the BFSK transmitter with such FPGAs.

To evaluate the logical resources needed by the BFSK transmitter in ASIC implementations, the right hand column in Table I gives the number of equivalent gates (EG) in the transmitter. The gate count was estimated using the Virtual Silicon standard cell library based on the UMC L180 0.18 µm 1P6M Logic process (UMCL18G212T3 [START_REF]0.18 μm VIP Standard Cell Library Tape Out Ready[END_REF]). The delay gates are replaced by more efficient standard NOT gates. The gate count of a standard NOT gate is 0.67 EG, and that of the standard multiplexor, 2.33 EG. The standard NAND gate uses 1 EG. So the number of gates of the whole BFSK transmitter ranges from 4.67 EG (N = 0, K = 1) to 10.03 EG (N = 4, K = 5). Note that one flip-flop requires between 5.33 EG and 12.33 EG to store a single bit [START_REF]0.18 μm VIP Standard Cell Library Tape Out Ready[END_REF]. Such a transmitter is clearly ultra-lightweight in both FPGA and ASIC implementations. The small logical resources requirement of the proposed spy circuitry makes reverse engineering it harder, although not impossible [START_REF] Torrance | The state-of-the-art in semiconductor reverse engineering[END_REF]. Even with recent CMOS technologies, the attacker can reverse engineer ICs using a scanning electron microscope and an automatic tool for circuitry extraction [START_REF] Torrance | The state-of-the-art in semiconductor reverse engineering[END_REF], [START_REF] Subramanyan | Reverse Engineering Digital Circuits Using Structural and Functional Analyses[END_REF]. Nevertheless, the smaller the piece of hardware used for BFSK transmitter the harder it is to detect during reverse engineering. Detection of the transmitter using standard Trojan detection methods [START_REF] Agrawal | Trojan Detection using IC Fingerprinting[END_REF], [START_REF] Jin | Hardware Trojan Detection using Path Delay Fingerprint[END_REF] is not feasible because the transmitter does not change the data path of the circuit and because of the ultra-low signal-to-noise ratio on the electromagnetic channel, as shown in our experimental results below (Section 4).

IV. EXPERIMENTAL RESULTS

The electromagnetic radiation of the device was evaluated using the near-field electromagnetic analysis test bench described in [START_REF] Bayon | EM leakage analysis on True Random Number Generator: Frequency and localization retrieval method[END_REF]. The border between the far field and the near field can be considered to be about 23 mm from the device, depending on the hardware concerned. The most important part of the test bench is the acquisition chain. It determines the signal to noise ratio and measurement precision.

The chain, as presented Fig. 2, is composed of:  A Langer magnetic probe with a frequency range of from 30 MHz to 3 GHz and a spatial resolution of approximately 500 µm.  A Miteq low-noise amplifier with a frequency range of from 100 MHz to 1 GHz.  A LeCroy oscilloscope with a frequency range of up to 3.5 GHz and a sampling rate of up to 40 GS/s.

As presented in Fig. 2, the device to be tested (the board) is fixed to a XYZ table with repeatability of movement of 1 µm. The test bench, including the acquisition chain, XYZ table, FPGA configuration and power supply variations, is controlled by a computer. Electromagnetic analysis of IC is contactless, local, and can be spatial or/and temporal. This last point makes it possible to perform frequency analysis of the electromagnetic emanation. In the your bench the spectral range is limited to 100 MHz and 1 GHz. Standard devices aimed at direct BFSK demodulation cannot be used for these relatively high frequencies. Available integrated BFSK demodulators are limited to a few dozen megahertz. For this reason, we developed a dedicated BFSK demodulation scheme for our needs, in which a spectral analysis of the low noise amplifier output (a component of the test bench) is performed to measure the f 0 and f 1 spectral contribution. The transmitted high (low) level is detected when f 1 spectral contribution is higher (lower) than that of f 0 . Fig. 3 illustrates the spectral analysis of the BFSK transmitter's electromagnetic emission when N = 1 and K = 1, which corresponds to a small transmitter with high frequencies in Table I. For the spectral analysis, a 16 384 points FFT was computed. Fig. 3 presents a zoom (X and Y axis) on the global spectrum of the local EM emanation of the circuit when the BFSK transmitter sends a '0' (in blue) and when the BFSK transmitter sends a '1' (in red). Notice also that we placed a small antenna in the close vicinity of the ring. The amplitude of the spectral rays at 180, 200, 220, 240, 260, 280 MHz are very high compared to the two spectral rays at 189.2 MHz and 272.2 MHz. However, we have cut the upper part of the spectrum in order to see the two interesting rays (at 189.2 MHz and 272.2 MHz). These frequencies correspond to the spectral contribution of the BFSK frequencies f 0 and f 1 . Actually, according to Table I, for Microsemi FUSION FPGA, the frequency f 0 is around 272 MHz and f 1 is around 189 MHz. Slight variations in the frequency values (around the values presented in Table I) are due to environmental variations (mainly temperature). These variations are too small to jeopardize the success of demodulation because the BFSK designer knows the chosen parameters N and K and targeted frequencies f 0 and f 1 for transmission of low and high levels. Without knowledge of the BFSK parameters, the electromagnetic transmission cannot be easily detected because it cannot be distinguished from spectral noise. The signal-to-noise ratio of the BFSK transmission in Fig. 3 is -135 dB for a 1 GHz bandwidth. Such an ultra-low SNR represents efficient protection against unwanted BFSK transmitter detection via a side channel. However, knowing the N and K parameters, the BFSK designer can calibrate the demodulation (determine the two frequencies) by electromagnetic analysis of the ring oscillators based on the differential spectral analysis as described in [START_REF] Bayon | EM leakage analysis on True Random Number Generator: Frequency and localization retrieval method[END_REF].

The spectral contribution of the two BFSK frequencies during transmission (which is limited by the transmitter enable signal) at the low-noise amplifier output is measured to determine the transmitted bit sequence. In order to apply the demodulation technique described here, called coherent demodulation, theoretically the bitstream rate (bitrate) is limited to 0.5 times the frequency difference between f 0 and f 1 . In the case shown in Fig. 3, theoretically the maximum bitrate is 41.5 Mbps (theoretically limited to 53 Mbps when N = 0 and K = 1). The coherent demodulation scheme cannot be used for higher bitrates, instead more sophisticated and more expensive demodulation techniques should be used. To reduce the size of the BFSK transmitter, a time-interleaving transmitter should be used to increase the bitrate. However, the high transmission rate is not so important, because data (e.g. IP identifier or stolen data) can be stored at a higher data rate before being transmitted at a slower rate. The small area and unobtrusiveness of the BSFK transmitter are much more important properties than transmission rate.

For the coherent demodulation of the electromagnetic radiation, we propose a slippery window spectral analysis. Indeed, overall spectral analysis masks the effects of the nonstationarity of the signal and therefore provides no information about its temporal evolution. Slippery window spectral analysis is a three-dimensional representation of the signal: amplitude, frequency, and time. It requires two quantities Fw, the width of the FFT window frame and the difference Δτ between two frames. For our experiment, we chose Fw equal to 16 384 points (2 14 -point FFT) and Δτ equal to 100 points. For each frame, the FFT provides the software demodulator with the amplitude of signals f 0 and f 1 which enables the demodulator to distinguish between a transmitted '1' or '0'.

To illustrate data transmission from the circuit via the EM channel, we used a shift register that stored the following 16-bit sequence: "1011110111011100". The clock frequency of the shift register is 500 kHz. When the enable signal of the transmitter is given, the sequence is sent cyclically to the BFSK transmitter, which transmits it via the electromagnetic channel. Fig. 4 gives the result of the coherent demodulation obtained at a 500 Kbps bit rate, which served as a proof of concept.

16-bit sequence 16-bit sequence

V. COMPARISON WITH STATE OF THE ART SPY CIRCUITRIES USING A SIDE-CHANNEL

Table II compares the implementation of the proposed ultralightweight BFSK transmitter with other recently published state of the art methods. Table II gives the spy circuitry application (App.) for each reference; this may be IP protection (IPP) or hardware Trojan (HT) or both (for the presented work, PW). In addition, Table II gives the year of publication (YoP), the side channel used, the hardware resources required only for the leakage generator (for example we do not take the hardware used for IP watermark generation or the Trojan's payload into account). Unfortunately, the principles compared do not use the same hardware. For the sake of correctness, we give the implementation results as they are presented in the referenced papers. Nevertheless, the implementation bitrate of these previously published works can be roughly compared with our proposed solution. Based on published data, we computed the bitrate of all the proposals by using the number of clock cycles needed to send information via the side channel. For all the references presented in this table, the bitrate was computed using a 500 KHz frequency for data synchronization (same frequency is used for data transmission in Fig. 4).

As can be seen in Table II, the proposed work reaches the highest bitrate. The reason for such a good performance is first that we use a spectral analysis of the local electromagnetic leak based on a simple frequency modulation. Except for [START_REF] Kamoun | Experimental Implementation of 2ODPA attacks on AES design with flash-based FPGA Technology[END_REF], all the other solutions use a global measurement of power consumption, which reduces the signal-to-noise ratio of the information leaked via the side channel. Our proposal is clearly the smallest spy circuitry ever published. Although solutions based on circular shift-registers are well adapted to last generation FPGA families, since the 16-bit shift registers can be designed using only one look-up table, they are not suitable for ASIC technologies. Currently, an ASIC implementation of a 16-bit shift register requires 16 flip-flops whereas the solution we propose occupies an area equivalent to only one D-flip-flop.

In this paper, we present the proposed spy circuitry for IP protection, but it can also be used for hardware Trojan. Most of the other proposals could also be used for both applications. Note that in 2012, Kasper et al. proposed to use the work initiated in [START_REF] Lin | Trojan Side-Channels: Lightweight hardware Trojans through Side-Channel Engineering[END_REF] for hardware Trojan or IP watermarking implementation [START_REF] Kasper | Side Channels as Building Blocks[END_REF]. However, by using electromagnetic emanation and a configurable ring oscillator, the proposed solution is the most convincing for industrial applications (e.g., those aimed at IP protection) because of its very small area and high bitrate. The first scenario is the identification of embedded IP in the supply chain. This identification is used in order to be sure to don't use counterfeiting (fake) devices. In recent years, the issue of counterfeiting of integrated circuits has increased considerably. For example, the number of counterfeit electronic circuits collected by U.S. Customs from 2001 to 2011 has increased by around 700 [START_REF] Gorman | Counterfeit Chips on the Rise[END_REF]. Between 2007 and 2010, U.S. Customs collected 5.6 million counterfeit electronic products [START_REF] Agma | Alliance for Gray Markets and Counterfeit Adatement[END_REF]. Overall, the estimation of counterfeiting is about 7% of the semiconductor market [START_REF] Pecht | Bogus! Electronic manufacturing and consumers confront a rising tide of counterfeit electronics[END_REF] which represented a loss of about $ 22 billion in 2014 for the legal industry.

It is therefore crucial and strategic to be able to detect counterfeit IC as soon as possible in the supply chain (this is particularly crucial for military and space grad devices). Fig. 5 shows a possible framework to manage the device under test (control the enable signal) and check the IP identification by using an EM probe, an amplifier and a dedicated acquisition system including a spectral analysis and the proposed demodulation method. Due to the high bit rate of the proposition solution the identification of the ID requires less than 1ms (with 500Kps bit rate as in Fig 4 .). This counterfeiting detection could be completed by other physical (invasive or not) and optical inspection [START_REF] Tehranipoor | Counterfeit Integrated Circuits -Detection and Avoidance[END_REF]. The second scenario occurs when a IP designers would like to verify the illegal presence of its IP inside a device (ASIC or FPGA). In this case the proposed transmitter provides to the Validity check ok identification scheme a data like a PUF [START_REF] Bossuet | A PUF based on a transient effect ring oscillator and insensitive to locking phenomenon[END_REF] or a watermarking. Watermarking is a technique of steganography which provides the ownership of an IC (or an IP) by checking for the presence of hidden information called the watermark [START_REF] Kocher | Differential Power Analysis[END_REF]. Most of the watermarking methods proposed in the literature need a complex verification scheme. Nevertheless it is possible to use power consumption as proposed in [START_REF] Kerckhof | Intellectual Property Protection for FPGA Designs with Soft Physical Hash Functions: First Experimental Results[END_REF] and [START_REF] Kocher | Differential Power Analysis[END_REF] but it is easy and cheap to use global countermeasure in order to mask the power consumption due to the watermark [START_REF] Kamoun | Correlated Power Noise Generator as a Low Cost DPA Countermeasure to Secure Hardware AES Cipher[END_REF]. Using electromagnetic emanation in this scenario is better because as electromagnetic emanation is local it is really hard to mask it by using a global countermeasure. Moreover, in this paper we have shown that due to the SNR of BFSK signal, it is unrealistic to try to detect it without the precise knowledge of the used frequencies for data transmission.

VII. CONCLUSION

IP protection has become crucial topics for hardware security due to the lack of trust in IP market. In this paper, we have presented an ultra-lightweight transmitter of IP identity using the electromagnetic side channel. Based on a configurable ring oscillator, our solution exploits a BFSK signal to transmit information by way of the electromagnetic channel. By performing a slippery window spectral analysis of the near field electromagnetic emanations captured locally over the BFSK transmitter circuitry, the proposed transmission achieves a high bitrate (experimentally 500 Kbps and theoretically limited to 53 Mbps with a Microsemi Fusion FPGA), which has not been achieved before. Moreover, the transmitter occupies very small area. For the highest frequency and data rate, our solution requires 4.67 equivalent gates, which it is less than the requirement of a small D-flip-flop. Such a small requirement of logical resources makes reverse engineering of the chip very difficult and detection of the transmitter using standard Trojan detection methods is not feasible.

2

 2 MHz when N = 4).

Fig. 1 .

 1 Fig. 1. Architecture of the ultra-lightweight digital BFSK transmitter based on a configurable ring oscillator.

Fig. 2 .

 2 Fig. 2. Near-field Electromagnetic analysis test bench.

Fig. 3 .

 3 Fig. 3. Parts (zoom in x-axis and y-axis) of the electromagnetic emanation spectral analysis of the proposed BFSK transmitter when it sends a high level at f1=189.2MHz (in red) and when it sends a low level at f0=272.2 MHz (in blue).

Fig. 4 .

 4 Fig. 4. Coherent demodulation of the 16-bit code word cyclically sent by the BFSK transmitter at 500 Kbps, the top (bottom) graph corresponds to the spectral contribution of signal at f1 (f0).

  VI. INDUSTRIAL SCENARIOS USING THE PROPOSED IPPROTECTIONAccording to the previous section, in comparison with other works, our propose goes clearly towards using a spy circuit in an industrial context for IP protection. Two industrial scenarios are presented in the following.

Fig. 4 .

 4 Fig. 4. Rapid and contactless IP identification in the supply chain by using EM transmission of IP ID.

TABLE I

 I

			. HARDWARE IMPLEMENTATION RESULTS OF THE
			BFSK TRANSMITTER
	N	K	f0 (MHz)	f1 (MHz)	Fusion Tiles	LUT4	EG
		1	385	280	3	2	4.67
		2	383	210	4	3	5.34
	0	3	384	151	5	4	6.01
		4	385	130	6	5	6.68
		5	381	111	7	6	7.35
		1	272	189	4	3	5.34
		2	272	156	5	4	6.01
	1	3	270	120	6	5	6.68
		4	271	106	7	6	7.35
		5	269	93	8	7	8.02
		1	168	144	5	4	6.01
		2	169	124	6	5	6.68
	2	3	169	100	7	6	7.35
		4	168	91	8	7	8.02
		5	168	79	9	8	8.69
		1	146	128	6	5	6.68
		2	147	112	7	4	7.35
	3	3	146	92	8	5	8.02
		4	145	84	9	6	8.69
		5	144	74	10	7	9.36
		1	123	110	7	6	7.35
		2	121	98	8	7	8.02
	4	3	122	83	9	8	8.69
		4	121	77	10	9	9.36
		5	119	70	11	10	10.03

ACKNOWLEDGMENT

The work presented in this paper was realized in the frame of the SALWARE project number ANR-13-JS03-0003 supported by the French "Agence Nationale de la Recherche"and by the French "Fondation de Recherche pour l'Aéronautique et l'Espace".