The Valuation Effects of Private Placements of Public Corporations' Common Stock

Artikel

Outside shareholders should benefit when the firm issues common stock through a private placement. Our propositions are (1) that the private issue of common equity creates a value-maximizing insider that has the incentive and ability to monitor and discipline, and thereby reduce agency costs and (2) investors can reduce uncertainty about the value of thinly traded stock by observing the share price negotiated by the well-informed buyer. Both of these benefits are especially applicable to small firms. Our empirical evidence supports hypotheses based on these propositions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Small Business Finance ; ISSN: 1057-2287 ; Volume: 1 ; Year: 1992 ; Issue: 3 ; Pages: 205-220 ; Greenwich, CT: JAI Press

Classification and Topics

• Classification: Management ; Asset Pricing; Trading Volume; Bond Interest Rates ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Valuation ; Stock ; Equity ; Private Placements

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): McDaniel, W. R. ; McDaniel, William R.
• Event: Veröffentlichung
• (who): JAI Press
• (where): Greenwich, CT
• (when): 1992

Further information

• Handle: http://hdl.handle.net/10419/114637
• Last update: 10.03.2025, 11:44 AM CET