Publication:
Private placement, share prices, volume and financial crisis: an emerging market study
Abstracts views
46
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15
Date
2013
SDG:
Abstract
Firms are increasingly resorting to private placements in recent years, yet there is no published study of emerging markets. There is a unique opportunity to study this behavior during a severe financial crisis, when firms resorted to private placements to recover financially distressed firms. Our analysis using data over fifteen years shows (a) a significant 2–3% positive share price reaction, affirming asymmetric information effect, (b) a significant volume activity, and (c) the price impact is different across a period of a major financial crisis. If the proceeds from placement are earmarked for investment, share price is negatively (positively) correlated during the crisis (non-crisis) periods. Our finding on regulation is inconsistent with prior reports in developed markets: this is explained by the stricter restrictions on trading of private issues in emerging market. These results provide modest new contributions to the literature on private placements.
Keywords
Private placement , Wealth and volume effect , Financial crisis , Ownership concentration , Information asymmetry , Long run performance
Citation
Normazia, M., Hassan, T., Ariff, M., & Ramadili Mohd, S. M. (2013). Private placement, share prices, volume and financial crisis: an emerging market study. Global Finance Journal, 24(3), 203-221. https://doi.org/10.1016/j.gfj.2013.10.003
Publisher
Elsevier