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Introduction

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Private Placement of Public Equity in China

Part of the book series: SpringerBriefs in Finance ((BRIEFSFINANCE))

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Abstract

This is the introductory chapter of the book. The main reason I am motivated to study private placement in China is that it is the most popular equity refinancing method but has not been thoroughly studied. In this chapter, I first show the popularity of private placement in China relative to SEO and rights offering. Then I introduce main findings and contribution of the study.

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Notes

  1. 1.

    In this study, I treat high-net-worth investors as institutional investors.

  2. 2.

    I provide detailed comparisons among private placement, SEO and rights offering in Chap. 3.

  3. 3.

    In the case of Singapore, although Tan et al. (2002) document positive abnormal returns for the announcement period using a 1987–1996 sample, Chen et al. (2003) find significant negative announcement effect. I will discuss more in the literature review of Chap. 2.

  4. 4.

    Studies on seasoned public offering in the US have documented unanimously negative abnormal returns for the announcement period (Smith 1977; Myers and Majluf 1984; Masulis and Korwar 1986; Eckbo and Masulis 1992). The sign of announcement effect for rights issues, however, is ambiguous. Smith (1977) documents insignificant abnormal returns in US rights issues, while Eckbo and Masulis (1992) point out that right issues in the US are followed by significant negative abnormal returns upon announcement. For Korea, Kang (1990) shows that there is positive abnormal announcement-period return. Ariff and Finn (1989) also find the same positive effect in Singapore. Australia and New Zealand (Marsden 2000), on the contrary, experience negative abnormal announcement-period returns.

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Authors and Affiliations

  1. Department of Research and Development, China Huarong Asset Management Co., Ltd and School of Finance, Renmin University of China, Beijing, China

    Pengcheng Song

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  1. Pengcheng Song
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Song, P. (2014). Introduction. In: Private Placement of Public Equity in China. SpringerBriefs in Finance. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-55093-5_1

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  • DOI: https://doi.org/10.1007/978-3-642-55093-5_1

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  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-55092-8

  • Online ISBN: 978-3-642-55093-5

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