Announcement Effects of Private Equity Placements－The Impact of Corporate Governance, Earnings Management, and Intangible Assets
Date Issued
2007
Date
2007
Author(s)
Huang, Li-Ru
DOI
zh-TW
Abstract
The announcement of private equity placement is usually considered as a good signal. However, a private placement makes few investors to buy shares with high discounts, so it might benefit specific persons and sacrifice shareholders’ equity without sound corporate governance. It might also motivate managements to manipulate financial statement numbers by lowering the placement price and for attracting investors. Thus, the study examines the impact of corporate governance and earnings management on the information content of private placement announcements. In addition, we also explore the relationship between private placement announcements and information asymmetry caused by intangible assets. We expect that the positive announcement effects will be weaker since accounting information asymmetry is more difficult to be mitigated.
The sample includes TSE-listed and OTC-listed companies that place shares privately from 2002 to 2006. We define four different event dates to estimate cumulative abnormal returns and test the factors influencing the effect of private placement announcements with multiple regression analysis. Empirical results are not consistent on four event dates. In general, earnings management variables and intangible assets variables can not explain announcement effects. Some of corporate governance variables are significantly related to abnormal returns as predicted. The evidence reveals that the market reaction to the private equity placement will reflect the quality of the governance structure.
Subjects
私募股權
公司治理
盈餘管理
無形資產
private placement of equity
corporate governance
earnings management
intangible assets
Type
other
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