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Understanding the Positive Announcement Effects of Private Equity Placements: New Insights from Hong Kong Data

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  • Xueping Wu
  • Zheng Wang
  • Jun Yao

Abstract

The literature has documented positive announcement effects for privately placed seasoned equity issues. This study shows positive announcement effects not only for private but also for public placements in Hong Kong. Our unique data offer new insights not obtainable from U.S. data as we examine the cross-sections of the announcement effects. Most importantly, we find that the announcement effect is more likely to be positive for smaller issuers, such as private placing firms and some public issuers where asymmetric information arises more from growth than from assets in place. This finding is consistent with the generalized Myers-Majluf model. Copyright Springer 2005

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File URL: http://hdl.handle.net/10.1007/s10679-005-2264-y
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Bibliographic Info

Article provided by Springer in its journal Review of Finance.

Volume (Year): 9 (2005)
Issue (Month): 3 (09)
Pages: 385-414

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Handle: RePEc:kap:eurfin:v:9:y:2005:i:3:p:385-414

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Web page: http://springerlink.metapress.com/link.asp?id=111870

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  1. Armo Gomes & Walter Novaes, 2001. "Sharing of Control as a Corporate Governance Mechanism," Penn CARESS Working Papers 3756d78204ca49d92aaf1c17c, Penn Economics Department.
  2. Wu, Xueping & Wang, Zheng, 2005. "Equity financing in a Myers-Majluf framework with private benefits of control," Journal of Corporate Finance, Elsevier, vol. 11(5), pages 915-945, October.
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Cited by:
  1. Lee, Chin-Chong & Poon, Wai-Ching & Sinnakkannu, Jothee, 2014. "Why are rights offers in Hong Kong so different?," Pacific-Basin Finance Journal, Elsevier, vol. 26(C), pages 176-197.
  2. Sazali Abidin & Krishna Reddy & Liehui Chen, 2012. "Determinants of ownership structure and performance of seasoned equity offerings: Evidence from Chinese stock markets," International Journal of Managerial Finance, Emerald Group Publishing, vol. 8(4), pages 304-331.
  3. Wu, Xueping & Au Yeung, Chau Kin, 2012. "Firm growth type and capital structure persistence," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3427-3443.

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