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Discounted Private Placements in New Zealand: Exploitation or Fair Compensation?

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  • Hamish D. Anderson

    ()
    (Department of Finance, Banking and Property, Massey University, Private Bag 11222, Palmerston North, New Zealand)

Abstract

Market commentators have suggested that New Zealand's lax private placement and disclosure regulation allows private placement purchasers to immediately sell discounted shares without disclosing these transactions to the market. However, New Zealand firms with the deepest discounts tend to have higher risks, lower returns and higher costs associated with evaluating firm value. Therefore, the possibility that deep discounts may simply represent adequate compensation for the extra risk and cost private placement purchasers incur cannot be ruled out. In this respect private placement purchasers in New Zealand take on the role and risks associated with investment banker and underwriter.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Review of Pacific Basin Financial Markets and Policies.

Volume (Year): 09 (2006)
Issue (Month): 04 ()
Pages: 533-548

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Handle: RePEc:wsi:rpbfmp:v:09:y:2006:i:04:p:533-548

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Related research

Keywords: Seasoned equity; private equity placements; regulation; JEL Classification: G18; JEL Classification: G32; JEL Classification: G38;

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Cited by:
  1. C├ęcile Carpentier & Jean-Marc Suret, 2009. "Private Placements by Small Public Entities: Canadian Experience," CIRANO Working Papers 2009s-12, CIRANO.

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