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Impact of entrenched ultimate owners’ self-dealing on SEO methods choice and discounts of private placements––Evidence from listed companies in China

Gang Jia, Wanli Li and He Zhang

Emerging Markets Review, 2019, vol. 38, issue C, 404-422

Abstract: This study investigates how ultimate owners' self-dealing motivations can affect seasoned equity offering (SEO) methods using the data on listed companies in China during 2006–2015. We find that public equity offerings conduce to enhanced ultimate owner's control and preserve the control structure of the issuers. Moreover, there is a significant positive relation between controlling shareholder's control margin and the likelihood of choosing a private placement. A firm is more likely to choose public offerings in the presence of multiple large shareholders. Further tests show that self-dealing motivations significantly affect price discounts of private placements.

Keywords: Entrenchment; Self-dealing; SEO; Private placements (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2019
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