China's Listed Companies Private Placement Of Long-term Stock Price Performance

This paper examines the relation between stock price performance and the identity of the investors buying the shares in private placements of equity. Results show that although the private placement announcement effect is positive, the long-term abnormal returns after placements are negative. Both announcement and long-term abnormal returns are significantly higher when the shares are placed with affiliated investors than only with institutional investors. Additionally, results show normal long-term returns following placements to affiliated investors and negative long-term returns following placements to institutional investors.