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Long-run Stock Performance of Equity-Issuing Firms: The Case of Private Placements in Singapore

Author

Listed:
  • Sheng-Syan Chen

    (Yuan-Ze University, R.O.C.)

  • Kim Wai Ho

    (Nanyang Technological University, Singapore)

  • Cheng-Few Lee

    (Rutgers University, USA)

  • Gillian H. H. Yeo

    (Nanyang Technological University, Singapore)

Abstract

We find that Singapore listed firms which have conducted private placements subsequently experience long-run stock underperformance. The long-run underperformance is more severe for small firms and firms with a higher book-to-market ratio. This suggests that small firms and firms with poorer growth prospects are more likely to time the issue when the stock is temporarily overvalued. Further more, we find a positive relation between the long-run stock performance and the change in ownership concentration of the issuing firms, which is consistent with the alignment-of-interests hypothesis. We do not find evidence supporting the earnings-management hypothesis.

Suggested Citation

  • Sheng-Syan Chen & Kim Wai Ho & Cheng-Few Lee & Gillian H. H. Yeo, 2002. "Long-run Stock Performance of Equity-Issuing Firms: The Case of Private Placements in Singapore," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 417-438.
    • Handle: RePEc:wsi:rpbfmp:v:05:y:2002:i:03:n:s0219091502000766
    DOI: 10.1142/S0219091502000766
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    Citations

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    Cited by:

    1. Ioannis V. Floros & Nandu J. Nagarajan & Shiva Sivaramakrishnan, 2020. "The certification role of insider participation in PIPEs," Review of Quantitative Finance and Accounting, Springer, vol. 54(4), pages 1417-1447, May.
    2. Kai-Shi Chuang, 2020. "Private placements, market discounts and firm performance: the perspective of corporate life cycle analysis," Review of Quantitative Finance and Accounting, Springer, vol. 54(2), pages 541-564, February.
    3. Liang, Hsiao-Chen & Jang, Woan-Yuh, 2013. "Information asymmetry and monitoring in equity private placements," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 460-475.
    4. Joseph R. Rakestraw & Raman Kumar & John J. Maher, 2020. "Industry-Average Earnings Management and IPO Pricing," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-46, January.

    More about this item

    Keywords

    Long-run stock returns; Equity offerings; Private placements; Emerging markets;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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