[经济学]understanding the positive announcement effects of private equity placements.pdfVIP

Review of Finance (2005) 9: 385–414 © Springer 2005 DOI 10.1007/s10679-005-2264-y Understanding the Positive Announcement Effects of Private Equity Placements: New Insights from Hong Kong Data 1 2 3 XUEPING WU , ZHENG WANG and JUN YAO 1City University of Hong Kong; 2 CITIC Fund Management (China); 3 City University of Hong Kong Abstract. The literature has documented positive announcement effects for privately placed seasoned equity issues. This study shows positive announcement effects not only for private but also for public placements in Hong Kong. Our unique data offer new insights not obtainable from U.S. data as we examine the cross-sections of the announcement effects. Most importantly, we find that the announcement effect is more likely to be positive for smaller issuers, such as private placing firms and some public issuers where asymmetric information arises more from growth than from assets in place. This finding is consistent with the generalized Myers-Majluf model. 1. Introduction The finance literature has shown that private equity placements on average produce positive announcement effects. This finding is based on evidence from several countries (e.g., Wruck, 1989 and Hertzel and Smith, 1993, for the U.S.; Kato and Schallheim, 1993 and Kang and Stulz, 1996, for Japan; Cronqvist and Nilsson, 2000, for Sweden; Eckbo and Norli, 2005a, for Norway). A great deal of theoret- ical and empirical analysis has been devoted to understanding this phenomenon. For example, in a widely cited article, Wruck (1989) argues that new equity sales through private placements enable a small number of participants in the new equity purchases to play an active role through monitoring as a result of changes in ownership structures that follow the prediction made b