A corporation intends to raise additional funds from its existing shareholders rather than use the services of an underwriter, the corporation is engaging in a rights offering.
A corporation most commonly issues a rights offering to raise additional capital. A rights offering issue happens when a company offers new shares to its current shareholders. Thus, this increases the number of shares, diluting their value.
A rights offering issue is neither good nor bad for a company although it is often considered as a sign that a company is struggling because it means it is raising more capital.
Hence, through rights offering, a corporation intends to raise additional funds from its existing shareholders.
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