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Private equity placements : = An investigation of discounts, price effects, and floatation costs.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	Private equity placements :/
Reminder of title:	An investigation of discounts, price effects, and floatation costs.
Author:	Srivastava, Ashwani Kumar.
Description:	1 online resource
Notes:	Source: Dissertations Abstracts International, Volume: 71-08, Section: A.
Contained By:	Dissertations Abstracts International71-08A.
Subject:	Finance. -
Online resource:	click for full text (PQDT)
ISBN:	9780315570245

Private equity placements : = An investigation of discounts, price effects, and floatation costs.
Srivastava, Ashwani Kumar.

Private equity placements :An investigation of discounts, price effects, and floatation costs. - 1 online resource

Source: Dissertations Abstracts International, Volume: 71-08, Section: A.

Thesis (Ph.D.)--University of Toronto (Canada), 1990.

Includes bibliographical references

This dissertation examines three aspects of Canadian private equity placements by listed corporations. The pricing of private placements in general and the determination of discounts on private equity in particular are examined first. A partial equilibrium model is developed which describes the relative price discount as a function of some issue-specific and purchaser-specific characteristics. The model is further augmented by the inclusion of "non-model" variables exogenous to the framework of the model. The resulting empirical model, corrected for multicollinearity, indicates a highly significant relationship between the relative price discount and the "variance of unrestricted security", the "cost of premature resales", the "expected risk premium", the "size" of the firm, the "offer size", the "institutional interest", the "industry type", and the "agent free". All variables other than the "variance" are significant at 99%. The effect of occurrence of a placement on the price of a firm's outstanding shares is also examined. A moving Scholes-Williams (1977) beta estimation procedure is utilized to estimate excess returns. The evidence is consistent with either a positive price effect, or no adverse price effects associated with the issue of private equity. This is in sharp contrast with documented evidence of public issues of common stock. Note, however, that the positive excess abnormal returns are economically insignificant. Also, no quantity-related price effects are found. The floatation costs of a private placement to the firm are also investigated. In particular, the underwriter compensation, the costs of underpricing, and the abnormal performance costs are analyzed. The average underwriter compensation is 2.5% of the gross proceeds, the maximum being 3.165%. No evidence is found for statistically significant underpricing. Also, no statistically significant negative abnormal performance in any one of the pre-offer, the offer, or the post-offer period is found (positive for "oil & gas" firms). Based upon comparable cost estimates available in the literature, private equity placements are found to be a cheaper source of external equity capital than public offering of common stock.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2024

Mode of access: World Wide Web

ISBN: 9780315570245Subjects--Topical Terms:

559073
Finance.
Index Terms--Genre/Form:

554714
Electronic books.

Private equity placements : = An investigation of discounts, price effects, and floatation costs.
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100 1 $a Srivastava, Ashwani Kumar. $3 1475064
245 1 0 $a Private equity placements : $b An investigation of discounts, price effects, and floatation costs.
264 0 $c 1990
300 $a 1 online resource
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500 $a Source: Dissertations Abstracts International, Volume: 71-08, Section: A.
500 $a Publisher info.: Dissertation/Thesis.
500 $a Advisor: Gordon, M. J.
502 $a Thesis (Ph.D.)--University of Toronto (Canada), 1990.
504 $a Includes bibliographical references
520 $a This dissertation examines three aspects of Canadian private equity placements by listed corporations. The pricing of private placements in general and the determination of discounts on private equity in particular are examined first. A partial equilibrium model is developed which describes the relative price discount as a function of some issue-specific and purchaser-specific characteristics. The model is further augmented by the inclusion of "non-model" variables exogenous to the framework of the model. The resulting empirical model, corrected for multicollinearity, indicates a highly significant relationship between the relative price discount and the "variance of unrestricted security", the "cost of premature resales", the "expected risk premium", the "size" of the firm, the "offer size", the "institutional interest", the "industry type", and the "agent free". All variables other than the "variance" are significant at 99%. The effect of occurrence of a placement on the price of a firm's outstanding shares is also examined. A moving Scholes-Williams (1977) beta estimation procedure is utilized to estimate excess returns. The evidence is consistent with either a positive price effect, or no adverse price effects associated with the issue of private equity. This is in sharp contrast with documented evidence of public issues of common stock. Note, however, that the positive excess abnormal returns are economically insignificant. Also, no quantity-related price effects are found. The floatation costs of a private placement to the firm are also investigated. In particular, the underwriter compensation, the costs of underpricing, and the abnormal performance costs are analyzed. The average underwriter compensation is 2.5% of the gross proceeds, the maximum being 3.165%. No evidence is found for statistically significant underpricing. Also, no statistically significant negative abnormal performance in any one of the pre-offer, the offer, or the post-offer period is found (positive for "oil & gas" firms). Based upon comparable cost estimates available in the literature, private equity placements are found to be a cheaper source of external equity capital than public offering of common stock.
533 $a Electronic reproduction. $b Ann Arbor, Mich. : $c ProQuest, $d 2024
538 $a Mode of access: World Wide Web
650 4 $a Finance. $3 559073
655 7 $a Electronic books. $2 local $3 554714
690 $a 0508
710 2 $a ProQuest Information and Learning Co. $3 1178819
710 2 $a University of Toronto (Canada). $3 1182602
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