Private Placement Under the Control of Large Shareholders and Long-Run Stock-Price Performance

Fang-Fei Ding and Ting-Yu Gao ()
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Fang-Fei Ding: University of Hunan
Ting-Yu Gao: University of Hunan

Chapter Chapter 14 in The 19th International Conference on Industrial Engineering and Engineering Management, 2013, pp 131-141 from Springer

Abstract: Abstract We examine post-offering stock-price performance for a sample of firms that issue stock privately during the June 2006 to December 2007 period. We find that, the short-run abnormal returns are irrelevant to the object of issue, while there is strong evidence of a significant, negative correlation between the long-run abnormal returns and the object of issue. When the large shareholders participate in the offering, there is a lower long-run abnormal returns compared to the large shareholders not involved in the issuing. We further examine the relationship between the stock-price performance and the separation degree of interests between the big shareholders and minor shareholders. Our results show that the separation degree of interests also has a negative, significant correlation with the long-run abnormal returns. This evidence is consistent with the tunneling hypothesis.

Keywords: Large shareholders; Private placement; The long-run abnormal returns; The object of issue (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-38442-4_14

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DOI: 10.1007/978-3-642-38442-4_14

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