Cheng-Yi Shiu is an Associate Professor of Finance in the College of Management at National Central University in Taoyuan, Taiwan, ROC. Hui-Shan Wei is an Assistant Professor of Accounting Information in the College of Business at Southern Taiwan University of Science and Technology in Tainan, Taiwan, ROC.
Do Private Placements Turn Around Firms? Evidence from Taiwan
Version of Record online: 29 MAY 2013
© 2013 Financial Management Association International
Volume 42, Issue 4, pages 875–899, Winter 2013
How to Cite
Shiu, C.-Y. and Wei, H.-S. (2013), Do Private Placements Turn Around Firms? Evidence from Taiwan. Financial Management, 42: 875–899. doi: 10.1111/fima.12027
We are grateful to Raghu Rau (Editor), an associate editor, and an anonymous referee for their constructive comments and suggestions. We also thank seminar participants at National Central University and National Chengchi University for providing valuable comments.
- Issue online: 24 OCT 2013
- Version of Record online: 29 MAY 2013
We analyze the stock and operating performance of firms issuing private placements in Taiwan. Issuing firms have poor pre-issue performance and earn significantly positive returns at announcement. Placements with an owner-manager or with nonexecutive directors are associated with better post-issue stock and operating performance, suggesting that an increase in insiders’ stakes leads to better alignment of managerial incentives and an increase in monitoring by insiders. In contrast, placements made to outside investors are unlikely to turn around the issuing firms.