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Private Placement Under the Control of Large Shareholders and Long-Run Stock-Price Performance

In: The 19th International Conference on Industrial Engineering and Engineering Management

Author

Listed:
  • Fang-Fei Ding

    (University of Hunan)

  • Ting-Yu Gao

    (University of Hunan)

Abstract

We examine post-offering stock-price performance for a sample of firms that issue stock privately during the June 2006 to December 2007 period. We find that, the short-run abnormal returns are irrelevant to the object of issue, while there is strong evidence of a significant, negative correlation between the long-run abnormal returns and the object of issue. When the large shareholders participate in the offering, there is a lower long-run abnormal returns compared to the large shareholders not involved in the issuing. We further examine the relationship between the stock-price performance and the separation degree of interests between the big shareholders and minor shareholders. Our results show that the separation degree of interests also has a negative, significant correlation with the long-run abnormal returns. This evidence is consistent with the tunneling hypothesis.

Suggested Citation

  • Fang-Fei Ding & Ting-Yu Gao, 2013. "Private Placement Under the Control of Large Shareholders and Long-Run Stock-Price Performance," Springer Books, in: Ershi Qi & Jiang Shen & Runliang Dou (ed.), The 19th International Conference on Industrial Engineering and Engineering Management, edition 127, chapter 0, pages 131-141, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-38442-4_14
    DOI: 10.1007/978-3-642-38442-4_14
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