Discounted Private Placements in New Zealand: Exploitation or Fair Compensation?

2006 ◽  
Vol 09 (04) ◽  
pp. 533-548 ◽  
Author(s):  
Hamish D. Anderson
Keyword(s):  
New Zealand ◽  
Firm Value ◽  
Disclosure Regulation ◽  
Private Placement ◽  
Investment Banker ◽  
Private Placements ◽  
Fair Compensation

Market commentators have suggested that New Zealand's lax private placement and disclosure regulation allows private placement purchasers to immediately sell discounted shares without disclosing these transactions to the market. However, New Zealand firms with the deepest discounts tend to have higher risks, lower returns and higher costs associated with evaluating firm value. Therefore, the possibility that deep discounts may simply represent adequate compensation for the extra risk and cost private placement purchasers incur cannot be ruled out. In this respect private placement purchasers in New Zealand take on the role and risks associated with investment banker and underwriter.

Private Placements in the Capital Markets Union

2018 ◽  
Author(s):  
Frank GB Graaf
Keyword(s):  
Capital Markets ◽  
Alternative Source ◽  
Private Placement ◽  
Private Placements ◽  
Capital Markets Union

This chapter looks at recent initiatives in the context of the European Commission's flagship plans for a Capital Markets Union (CMU) designed to encourage a pan-European private placement market. In reality, private placements are mainly available as a funding tool for medium-sized and larger companies. Nonetheless, private placements are regarded by CMU's policymakers as an alternative source of long-term funding, which is simple enough for smaller corporates and small and medium-sized enterprises (SME), and with benefits that they might find attractive. The Commission's initial intention in the design of a CMU was to enable a greater use by SMEs of private placements.

The Agency Cost Effects of Unionization on Firm Value

2008 ◽  
Vol 20 (1) ◽  
pp. 133-152 ◽  
Author(s):  
Vic Naiker ◽  
Farshid Navissi ◽  
VG Sridharan
Keyword(s):  
New Zealand ◽  
Firm Value ◽  
Agency Costs ◽  
Stock Exchange ◽  
Agency Cost ◽  
Labor Intensity ◽  
Listed Firms ◽  
Industry Membership

ABSTRACT: Using a sample of 99 New Zealand stock-exchange-listed firms we employ agency framework and strategy typology to examine whether introduction of unionization legislation affects value of prospector firms more negatively than defender firms. The results from this examination indicate that firms characterized by strategy of higher Growth-Diversity and Innovation-Risk (prospector firms) experience greater loss in value. We attribute the results to the higher agency costs associated with the strategies adopted by prospector firms. The results hold after controlling for variables such as size, industry membership, labor intensity, and proportion of unionized workers.

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.

scholarly journals The Information Conveyed by Debt and Equity Announcements in Australia

2008 ◽  
Author(s):  
Oraluck Arsiraphongphisit
Keyword(s):  
Fund Raising ◽  
Convertible Debt ◽  
Equity Fund ◽  
Share Prices ◽  
Study Approach ◽  
Private Placement ◽  
Price Effects ◽  
Private Placements ◽  
First Time ◽  
New Evidence

This paper aims to report the findings associated with the effects of share prices around the disclosure dates of four different debt-and-equity fund-raising events over a 12-year period from 1991 to 2003 in Australia. By applying the well-known event study approach, along with the data-trimming procedures, a new idea is to remove all known confounding events and make corrections for thin-trading bias. The observed statistically significant price effects are consistent with theories: a positive price effect is observed for straight-debt and private placements whereas negative price effects occur when convertible debt and rights issues are announced. The results pertaining to the private placement effect is reported for the first time on this market. These findings are consistent with leverage, agency, and asymmetric information theories. It is believed that this study contributes new evidence on private placements and other events adding to existing literature surrounding the matter at hand.  

Earnings and Risk Changes around Private Placements of Equity

1998 ◽  
Vol 13 (1) ◽  
pp. 21-35 ◽  
Author(s):  
Michael Hertzel ◽  
Lynn Rees
Keyword(s):  
Stock Price ◽  
Private Equity ◽  
Future Prospects ◽  
Public And Private ◽  
Equity Issues ◽  
Future Earnings ◽  
Private Placement ◽  
Price Effects ◽  
Private Placements ◽  
Public Equity

This paper investigates earnings and risk changes for a sample of firms that issued equity in a private placement. The study is motivated by empirical findings that announcements of public and private sales of equity are associated with opposite stock price effects. We find that earnings increase significantly subsequent to the equity offer and that postoffer earnings changes are positively correlated with announcement period stock price effects. We do not find evidence that private equity sales convey information about the underlying riskiness of firms' assets. These results suggest that private placements of equity convey favorable information to investors about future earnings and contrast with evidence from earlier studies that announcements of public equity issues convey unfavorable information about future prospects.

Choice between rights issue and private placements of equity and the role of information asymmetry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bipin Sony ◽  
Saumitra Bhaduri
Keyword(s):  
Information Asymmetry ◽  
Private Equity ◽  
Emerging Market ◽  
Content Type ◽  
Private Placement ◽  
Private Placements ◽  
Rights Issue ◽  
The Impact ◽  
Role Of Information

PurposeThe objective of this paper is to investigate the role of information asymmetry in the equity selling mechanisms chosen by the firms from an important emerging market, India. Specifically, the authors look into the choice between the two most popular mechanisms of equity issues – rights issue and private placement of equity.Design/methodology/approachThis study introduces three analyst specific variables as proxies of information asymmetry as the conventional proxies are fraught with several disadvantages. First, the paper tests the choice between rights issue and private placement using a binary logistic model. In the second approach the authors use rights issue and segregate the private placements into preferential allotments and qualified institutional placements and test the impact of information asymmetry using a multinomial logistic regression.FindingsThe outcome of this empirical exercise shows that only those firms facing lesser information problems choose rights issue of equity. Private placements are chosen by firms facing higher information problems to circumvent information costs. The results remain invariant even after segregating the qualified institutional placements from private equity placement as the firms with information disadvantage choose to place equity privately.Originality/valueIn contrast to the conventional studies that focus on the debt-equity framework, the authors argue that the impact of information asymmetry is applicable even at disaggregated levels of equity selling mechanism.

Private School Placement: A Local Director's Perspective

1982 ◽  
Vol 49 (3) ◽  
pp. 214-219 ◽  
Author(s):  
David Audette
Keyword(s):  
Private School ◽  
Due Process ◽  
Least Restrictive Environment ◽  
Private Placement ◽  
State Education ◽  
Private Placements ◽  
Education Agency ◽  
Proper Perspective ◽  
Restrictive Environment ◽  
Local Programming

The consideration of private placement for a handicapped student's educational program by a local special services director can often be a complex deliberation. The irony of increased private placements for mild/moderately handicapped students, on the heels of landmark court cases mandating deinstitutionalization of programs for the handicapped (PARC, 1971; Mills, 1972), warrants a scrutiny of the interpretation and implementation of P.L. 94–142. Definitions of concepts such as “appropriate education” and “least restrictive environment” must be resolved. Problems of tuition rates, transportation costs, and due process activities are dilemmas which often accompany the issue of a private placement. Local education agency emphasis on well-developed local programming along with state education agency monitoring vigilance of federal regulations pertaining to least restrictive environment issues can provide a proper perspective to the question of private placement.

Diversification, corporate governance and firm value in small markets: evidence from New Zealand

2014 ◽  
Vol 55 (3) ◽  
pp. 627-657 ◽  
Author(s):  
Nawaf Al-Maskati ◽  
André J. Bate ◽  
Gurmeet S. Bhabra
Keyword(s):  
Corporate Governance ◽  
New Zealand ◽  
Firm Value
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