This paper examines the effectiveness of preemptive rights in protecting minority shareholders, drawing on new issuances by Chinese listed firms spanning from 2006 to 2022. The evidence reveals that, on average, only 62% of shareholders exercise their preemptive rights despite an 18% issuance discount, resulting in wealth losses of 6% of issuance amount for non-participating shareholders. More importantly, minority shareholders suffer greater wealth losses because they lack sophistication and face extra constraints in exercising their rights compared to controlling shareholders. These findings call for additional policy safeguards, such as rights transferability and controlling shareholders’ pre-commitment, to enhance minority shareholder protection.