The over-optimism of financial analysts and the long-run performance of firms following private placements of equity

2013 ◽  
Vol 10 (2) ◽  
pp. 82-92 ◽  
Author(s):  
Wen-Chun Lin ◽  
Shao-Chi Chang ◽  
Sheng-Syan Chen ◽  
Tsai-Ling Liao
Keyword(s):  
Financial Analysts ◽  
Long Run ◽  
Private Placements

scholarly journals Long-run Stock Performance of Equity-Issuing Firms: The Case of Private Placements in Singapore

2002 ◽  
Vol 05 (03) ◽  
pp. 417-438 ◽  
Author(s):  
Sheng-Syan Chen ◽  
Kim Wai Ho ◽  
Cheng-Few Lee ◽  
Gillian H. H. Yeo
Keyword(s):  
Earnings Management ◽  
Small Firms ◽  
Ownership Concentration ◽  
Positive Relation ◽  
Stock Performance ◽  
Listed Firms ◽  
Long Run ◽  
Private Placements ◽  
Growth Prospects ◽  
Book To Market Ratio

We find that Singapore listed firms which have conducted private placements subsequently experience long-run stock underperformance. The long-run underperformance is more severe for small firms and firms with a higher book-to-market ratio. This suggests that small firms and firms with poorer growth prospects are more likely to time the issue when the stock is temporarily overvalued. Further more, we find a positive relation between the long-run stock performance and the change in ownership concentration of the issuing firms, which is consistent with the alignment-of-interests hypothesis. We do not find evidence supporting the earnings-management hypothesis.

Long-run Performance Following Private Placements of Equity

1999 ◽  
Author(s):  
Michael G. Hertzel ◽  
Michael L. Lemmon ◽  
James S. Linck ◽  
Lynn L. Rees
Keyword(s):  
Long Run ◽  
Private Placements

Long-Run Performance Following Private Placements of Equity

CFA Digest ◽  
2003 ◽  
Vol 33 (2) ◽  
pp. 95-96
Author(s):  
Stephen M. Horan
Keyword(s):  
Long Run ◽  
Private Placements

Private Placements of Equity and Firm Value: Value Enhancing or Value Destroying?

2020 ◽  
pp. 1-31
Author(s):  
Jun-Koo Kang ◽  
James L. Park
Keyword(s):  
Firm Value ◽  
Managerial Entrenchment ◽  
Long Run ◽  
Announcement Returns ◽  
Heterogeneous Nature ◽  
Private Placements

Abstract This paper reassesses two conflicting hypotheses on the valuation impacts of private placements of equity (PPEs), the monitoring/certification hypothesis and the managerial entrenchment hypothesis, by focusing on the shareholder approval, active buyer, and premium pricing features of PPEs. We find that PPEs with these features have significant positive announcement returns and insignificant mean long-run returns, while the corresponding announcement and long-run returns for PPEs without such features are significantly negative. Firms with value-enhancing PPE features are better governed and use proceeds more efficiently. Thus, the heterogeneous nature of PPEs helps reconcile the puzzling return patterns and conflicting hypotheses regarding PPEs.

Long-Run Performance following Private Placements of Equity

2002 ◽  
Vol 57 (6) ◽  
pp. 2595-2617 ◽  
Author(s):  
Michael Hertzel ◽  
Michael Lemmon ◽  
James S. Linck ◽  
Lynn Rees
Keyword(s):  
Long Run ◽  
Private Placements

Analysts’ Beauty and Performance

2020 ◽  
Vol 66 (9) ◽  
pp. 4315-4335 ◽  
Author(s):  
Ying Cao ◽  
Feng Guan ◽  
Zengquan Li ◽  
Yong George Yang
Keyword(s):  
Job Performance ◽  
Physical Attractiveness ◽  
Information Access ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
Privileged Access ◽  
Long Run ◽  
Internal Support ◽  
Short Run ◽  
And Performance

We study whether sell-side financial analysts’ physical attractiveness is associated with their job performance. We find that attractive analysts make more accurate earnings forecasts than less attractive analysts. Moreover, more attractive analysts make stock recommendations that are more informative in the short run and more profitable in the long run. Additional analyses reveal that attractive analysts attain their better job performance at least partly through their privileged access to information from firm management. For the sources of the beauty effect, we find that more attractive analysts gain more media exposure, have better connections to institutional investors, and receive more internal support from their employers. Additional evidence suggests that analysts’ physical appearance per se at least partly explains our findings. Overall, our study shows that physical attractiveness has a profound impact on the job performance and information access of sell-side financial analysts. This paper was accepted by Shiva Rajgopal, accounting.

scholarly journals Investor Types and Company Performance through Private Placements Basing on State-Owned and -Controlled Listed Companies

2019 ◽  
Vol 14 (11) ◽  
pp. 250
Author(s):  
Li Jiaojiao ◽  
Qu Zenglong
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Listed Company ◽  
Listed Companies ◽  
The State ◽  
Announcement Effect ◽  
Short Term ◽  
Private Placement ◽  
Long Run ◽  
Private Placements

Theoretical and empirical analyses of listed companies owned and controlled by the state making private placement transactions during 2006 and 2013 were carried out to measure the short-term announcement effect of strategic and financial investors’ subscription for new shares in listed companies owned and controlled by the state on corporate governance and long-run performance of these listed companies. It was found that private placements had a positive influence on the performance of a state-owned and -controlled listed company as they brought new institutional investors to the company; strategic investors who subscribed for new shares in a state-owned and -controlled listed company have appeared to cause an announcement effect greater than financial investors; state-owned and -controlled listed companies that attracted strategic investors with private placements showed a higher level of corporate governance and better long-run performance in comparison to those launching private placements to financial investors only. This study reveals the differences between strategic and financial investors in their influences on short-term announcement effect, corporate governance, and long-run performance of a state-owned and -controlled listed company when they enter into private placement transactions with the company. These findings provide new perspectives on the economic consequences arising from the involvement of external institutional investors in private placements of state-owned and -controlled listed companies, which, to a certain extent, facilitate the decision-making process in private placement transactions and promote the mixed-ownership reform.

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