The valuation effects of private placements of ordinary shares

Callum, Craig L. (1996). The valuation effects of private placements of ordinary shares Honours Thesis, Dept. of Commerce, The University of Queensland.

       
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Author Callum, Craig L.
Thesis Title The valuation effects of private placements of ordinary shares
School, Centre or Institute Dept. of Commerce
Institution The University of Queensland
Publication date 1996
Thesis type Honours Thesis
Total pages 72
Language eng
Subjects 14 Economics
Formatted abstract This study is concerned with determining how market prices adjust to announcements of private placements of equity and identifying those factors which the market considers important when revising its estimate of firm value. Share price reactions to 288 private placements of ordinary stock are examined and statistically significant average abnormal returns are found. The positive effect on common shareholder's wealth appears to be related to the discount at which the shares are placed and the level of information asymmetry for the issuing firm. These results are consistent with private placements resolving information asymmetry problems and also with informed buyers sending a positive signal to the market about the issuing firm's value. There is no evidence of anticipated monitoring benefits following the private sales.

 
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