The effect of private placement of equity on short-run and performance of long-run stock return

• Main Author: 王郁樺
• Other Authors: 吳明政
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/04817817135545777737

碩士 === 國立彰化師範大學 === 商業教育學系 === 97 === In 2002, private placements have been added into the Securities and Exchange Law. Since private placement of marketable securities was opened, it has become in recent years an emerging issue in the capital market and one convenient channel for companies to raise funds. In recent years, the number of cases adopting private placement of marketable securities has been on the increase, demonstrating that private placements have gradually become a method for listed and OTC companies to raise funds. This research adopts an event-study methodology to investigate into the short announcement effect of private placement and the long-run performance of stock prices, and then adopts regression analysis to probe into possible causes that influence the announcement effect of private placements. The empirical result shows that listed companies will have positive abnormal returns if the announcement of private placements is made on the Board of Directors’ resolution day. It signifies that the announcement of private placements brings about a positive information effect on the announcement day, whereas OTC companies do not have a prominent positive information effect. That is to say, the short-run information effect of listed companies is better than that of OTC companies. However, long-run performances of stock prices of both listed and OTC companies are positive. Causes that influence the cumulative abnormal returns after the announcement of private placements include variations of discount, investment opportunities, the ratio of private placements, the B/M ratio, and the ratio of subscribers of internal managers. The ratio of private placements and B/M ratio pose a prominent impact on listed companies, whereas only the ratio of private placements poses a marked impact on OTC companies. The higher the ratio is, the higher the cumulative abnormal returns will be after the announcement. In the end, the research probes into if there is a pronounced disparity of the announcement effect among different industries. The research result shows that there is no significant impact in the cumulative abnormal returns after the announcement of private placements and the disparity in different industries is not obvious. Keywords: private equity placement, event-study methodology, abnormal returns, announcement effect