Does the Private Placement affect Shareholder Wealth? Evidence from Listed Companies in Taiwan.

• Main Authors: Ming-hsiu Tsai, 蔡明秀
• Other Authors: Woan-yuh Jang
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/40243038548158342221

碩士 === 國立臺灣科技大學 === 財務金融研究所 === 95 === Using the event study methodology, this study examines investors’ reactions to firm announcements of private placement. A sample of 293 private placement announcements during January 2002 and June 2006 in Taiwan was obtained. Moreover, we also discuss whether these findings differ by capital market, financing tool and financing demand. The findings of this research is as follows: First, over 50% of companies announcing private placement tend to have larger capital, lower percentage of shares held by directors, higher leverage ratio, and poor business performance. Second, the announcements of private placement have influence on shareholders’ wealth. However, there is information leakage before announcement dates of private placement. Third, stock market reaction to the announcements of private placement differs by industry. The average cumulative abnormal returns for firms in electronic industry are larger than those for firms in other industries. Fourth, there is information leakage before announcement dates of private equity. It seems that the internal sponsors have sold the old shares and bought the new issues in advance to realize the arbitrage profit, causing the announcement date to have the negative abnormal return. Fifth, when the financing demand is strengthening the company’s working capital, there is information leakage before announcement dates. It seems that the internal sponsors have sold the old shares and bought the new issues in advance to realize the arbitrage profit. Finally, market reactions to the announcement of private placement are positively associated with ROE one year before announcement.