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Institutional Ownership and Private Equity Placements: Evidence from Chinese Listed Firms

Author

Listed:
  • He, Qing
  • Li, Dongxu
  • Lu, Liping
  • Chong, Terence Tai Leung

Abstract

This paper examines the impact of institutional ownership on the performance of private equity placements (PEPs) for listed firms in China. We find that the presence of institutional investors can alleviate the information asymmetries between listed firms and the market. The market reaction to PEP announcements is significantly smaller if there is a higher portion of institutional shareholdings. Long-term firm operational performance after PEPs is positively correlated with institutional shareholdings. Moreover, we find that the relationship between institutional shareholdings and PEP performance is mainly driven by non-listed corporate investors and mutual funds. Finally, the relationship between PEP performance and institutional shareholdings is stronger in smaller PEP issuers.

Suggested Citation

  • He, Qing & Li, Dongxu & Lu, Liping & Chong, Terence Tai Leung, 2017. "Institutional Ownership and Private Equity Placements: Evidence from Chinese Listed Firms," MPRA Paper 92035, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92035
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    Cited by:

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    2. Wang, Yang & Ashton, John K. & Jaafar, Aziz, 2023. "Financial statement fraud, recidivism and punishment," Emerging Markets Review, Elsevier, vol. 56(C).

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    More about this item

    Keywords

    Institutional ownership; Private equity placements (PEPs); Information asymmetry; Strategic investor; Liquidity investor;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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