Agency Theory and Flotation Methods in Seasoned Equity Offerings: The Case in Taiwan
Kehluh Wang (),
Yi-Hsuan Chen () and
Szu-Wei Huang ()
Additional contact information
Kehluh Wang: Institute of Finance, National Chiao Tung University, 1001 Da Hsueh Road, Hsinchu, Taiwan 300, Taiwan
Yi-Hsuan Chen: Department of Finance, Chung Hua University, No. 707, Sec. 2, WuFu Rd., Hsinchu 300, Taiwan
Szu-Wei Huang: Institute of Finance, National Chiao Tung University, 1001 Da Hsueh Road, Hsinchu, Taiwan 300, Taiwan
Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2008, vol. 11, issue 04, 555-567
Abstract:
The purpose of this study is to examine the impacts of alternative flotation methods on price performance of seasoned equity offerings, and to compare the competing hypotheses supported by asymmetric information theory and agency theory. Based on 385 sample issues which were listed in Taiwan Stock Exchange from 1996 to 2006, we find that the bookbuilding flotation method demonstrates significant positive abnormal returns for issuing firms, whereas the fixed-price method exhibits negative results. The empirical findings support the agency theory in the sense that the bookbuilding procedure offers a mechanism to strengthen the external monitoring provided by blockholders, which can subsequently reduce the agency cost and thus increase the share price. Further cross sectional analysis confirms this argument. The result of the study implies that the governments should take effective actions to help regulate agency problems in emerging markets such as Taiwan.
Keywords: Seasoned equity offerings; flotation method; agency theory (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2008
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091508001477
Access to full text is restricted to subscribers
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:wsi:rpbfmp:v:11:y:2008:i:04:n:s0219091508001477
Ordering information: This journal article can be ordered from
DOI: 10.1142/S0219091508001477
Access Statistics for this article
Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee
More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().