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|Other Titles:||Determinants and Market Reactions: Public Offering vs. Private Placement|
Hsieh, Wan-Ting;Wu, Tsing-Zai C.
Private placement;Public offering;Adverse selection;Morale hazard
|Issue Date:||2016-06-01 14:08:34 (UTC+8)|
Through an amendment to the Securities Exchange Law, the Securites and Future Bereau of Taiwan started to allow private placement from February 6, 2002 on. We investigate a firm’s choice between public offering and private placement for listed firms in Taiwan. Our empirical results show that the issue cost, the adverse-selection cost, the moral-hazard cost, and the ownership structure are significant determinants for the choice of private placement for both stock issuance and bond issuance. The stock market performance and the electronic-industry attribution are also determinants for the private placement for stock issuance, but not for bond issuance. The associations between managers’ shareholdings and private placement for stock issuance and bond issuance are in opposite direction. For stock issuance, the lower the managers’ shareholdings are, the higher the probability of private placement will be. For bond issuance, however, the higher the managers’ shareholdings are, the higher the probability of private placement will be. We also examine the market reactions to the announcements of offering choices. Tests of the shareholders wealth effects of offering-choice announcements reveal that, as expected, the market reaction to the announcement of private equity placement is significantly positive compared to that of the public equity offering. The positive market responses to the private equity offering are significantly related to the adverse-selection cost, the morale-hazard cost, and cthe orporate-governance cost. However, market does not significantly react differently to private placement and public offerings for debt securites. Keywords: Private placement, Public offering, Adverse selection, Morale hazard.
International Journal of Accounting Studies
|Appears in Collections:||[會計評論] 期刊論文|
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