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The Wealth Effects of Private Stock Placements under Regulation D

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  • Alli, Kasim L
  • Thompson, Donald J, II

Abstract

This paper examines the wealth effects associated with unregistered private common stock placements under the Regulation D exemption by a sample of exchange listed and over the counter firms. Unlike the negative abnormal returns associated with public equity offerings, private placements of common stocks under Regulation D are initially associated with significantly positive abnormal returns. However, these firms experience significant negative price effects in the two years following the private placements. Copyright 1993 by MIT Press.

Suggested Citation

  • Alli, Kasim L & Thompson, Donald J, II, 1993. "The Wealth Effects of Private Stock Placements under Regulation D," The Financial Review, Eastern Finance Association, vol. 28(3), pages 329-350, August.
    • Handle: RePEc:bla:finrev:v:28:y:1993:i:3:p:329-50
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    Cited by:

    1. Scott Besley & Ninon Kohers & Tanja Steigner, 2007. "Private placements of common equity and the industry rival response," Applied Financial Economics, Taylor & Francis Journals, vol. 17(7), pages 559-568.
    2. Liang, Hsiao-Chen & Jang, Woan-Yuh, 2013. "Information asymmetry and monitoring in equity private placements," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 460-475.
    3. Kai-Shi Chuang, 2020. "Private placements, market discounts and firm performance: the perspective of corporate life cycle analysis," Review of Quantitative Finance and Accounting, Springer, vol. 54(2), pages 541-564, February.
    4. Hsu-Huei Huang & Min-Lee Chan, 2013. "The initial private placement of equity and changes in operating performance in Taiwan," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(3), pages 711-730, September.

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