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Understanding the Positive Announcement Effects of Private Equity Placements: New Insights from Hong Kong Data

Review of Finance, Vol. 9, No. 3, pp. 385-414, September 2005

Posted: 29 Sep 2005  

Xueping Wu

City University of Hong Kong (CityUHK) - Department of Economics & Finance

Zheng Wang

City University of Hong Kong (CityUHK) - Department of Economics & Finance

Jun Yao

City University of Hong Kong (CityUHK) - Department of Economics & Finance

Abstract

The literature has documented positive announcement effects for privately placed seasoned equity issues. This study shows positive announcement effects not only for private but also for public placements in Hong Kong. Our unique data offer new insights not obtainable from U.S. data as we examine the cross-sections of the announcement effects. Most importantly, we find that the announcement effect is more likely to be positive for smaller issuers, such as private placing firms and some public issuers where asymmetric information arises more from growth than from assets in place. This finding is consistent with the generalized Myers-Majluf model.

Keywords: SEO, placement, ownership structure, asymmetric information, growth

JEL Classification: G14, G32

Suggested Citation

Wu, Xueping and Wang, Zheng and Yao, Jun, Understanding the Positive Announcement Effects of Private Equity Placements: New Insights from Hong Kong Data. Review of Finance, Vol. 9, No. 3, pp. 385-414, September 2005. Available at SSRN: https://ssrn.com/abstract=808704

Xueping Wu (Contact Author)

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
+852 3442 7577 (Phone)
+852 3442 0195 (Fax)

HOME PAGE: http://personal.cityu.edu.hk/~efxpwu/

Zheng Wang

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Jun Alex Yao

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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