Corporate Governance and Private Placement Issuance In Australia

27 Pages Posted: 6 Sep 2017

See all articles by Suichen Xu

Suichen Xu

Queensland University of Technology - School of Economics and Finance

Janice C. Y. How

Queensland University of Technology; Financial Research Network (FIRN)

Peter Verhoeven

Queensland University of Technology - QUT Business School; Financial Research Network (FIRN)

Date Written: September 2017

Abstract

In this study, we examine the effectiveness of corporate governance in mitigating dilution in the economic and voting interests of existing nonparticipating (retail) shareholders in private placements. Based on a sample of 2420 private placements in Australia from 2001 to 2012, we find support for this proposition through the influence of corporate governance on pricing negotiation and firms’ choice of issuing method in private placements. Specifically, firms with better corporate governance offer private placements with a smaller discount, and are more likely to include a share purchase plan, which protects nonparticipating shareholders from ownership dilution in the placement.

Keywords: Private placements, Discount, Corporate governance, Share purchase plan, Retail investors

Suggested Citation

Xu, Suichen and How, Janice C. Y. and Verhoeven, Peter, Corporate Governance and Private Placement Issuance In Australia (September 2017). Accounting & Finance, Vol. 57, Issue 3, pp. 907-933, 2017. Available at SSRN: https://ssrn.com/abstract=3032134 or http://dx.doi.org/10.1111/acfi.12171

Suichen Xu (Contact Author)

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Janice C. Y. How

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Peter Verhoeven

Queensland University of Technology - QUT Business School ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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