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Private placements and investor involvement

Into, Camilla LU and Treyer, Magdalena (2015) BUSN89 20151
Department of Business Administration
Abstract
The purpose of this study is to investigate if there is a difference in the short-term announcement effects of equity private placements depending on the relationship of the investor with the issuing firms in terms of information asymmetry and agency conflicts.

An event study is conducted to study if there are abnormal returns. The abnormal returns will be used as the dependent variable in a regression which allows us to include more variables of interest.

We come to the conclusion that the investor type in a private placement has an effect on how the market reacts to the announcement of this issue. The announcement of an insider buyer results in a low positive abnormal return. There is weak support in our study that active buyers... (More)
The purpose of this study is to investigate if there is a difference in the short-term announcement effects of equity private placements depending on the relationship of the investor with the issuing firms in terms of information asymmetry and agency conflicts.

An event study is conducted to study if there are abnormal returns. The abnormal returns will be used as the dependent variable in a regression which allows us to include more variables of interest.

We come to the conclusion that the investor type in a private placement has an effect on how the market reacts to the announcement of this issue. The announcement of an insider buyer results in a low positive abnormal return. There is weak support in our study that active buyers get the highest abnormal returns. The market reactions are therefore best supported by the managerial entrenchment hypothesis whereas the information and monitoring hypotheses gain weak support. (Less)
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author
Into, Camilla LU and Treyer, Magdalena
supervisor
organization
alternative title
Examining the short-term abnormal returns to equity private placements depending on the investor’s involvement in the issuing company
course
BUSN89 20151
year
type
H1 - Master's Degree (One Year)
subject
keywords
Private placement, short-term abnormal return, discount, information asymmetry, information hypothesis, agency theory, monitoring hypothesis, managerial entrenchment hypothesis
language
English
id
5463922
date added to LUP
2015-06-16 16:37:24
date last changed
2015-06-16 16:37:24
@misc{5463922,
  abstract     = {The purpose of this study is to investigate if there is a difference in the short-term announcement effects of equity private placements depending on the relationship of the investor with the issuing firms in terms of information asymmetry and agency conflicts. 

An event study is conducted to study if there are abnormal returns. The abnormal returns will be used as the dependent variable in a regression which allows us to include more variables of interest.

We come to the conclusion that the investor type in a private placement has an effect on how the market reacts to the announcement of this issue. The announcement of an insider buyer results in a low positive abnormal return. There is weak support in our study that active buyers get the highest abnormal returns. The market reactions are therefore best supported by the managerial entrenchment hypothesis whereas the information and monitoring hypotheses gain weak support.},
  author       = {Into, Camilla and Treyer, Magdalena},
  keyword      = {Private placement,short-term abnormal return,discount,information asymmetry,information hypothesis,agency theory,monitoring hypothesis,managerial entrenchment hypothesis},
  language     = {eng},
  note         = {Student Paper},
  title        = {Private placements and investor involvement},
  year         = {2015},
}