Private placements and investor involvement
(2015) BUSN89 20151Department 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)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/5463922
- 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
- 2015
- 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}},
language = {{eng}},
note = {{Student Paper}},
title = {{Private placements and investor involvement}},
year = {{2015}},
}