Impact of entrenched ultimate owners’ self-dealing on SEO methods choice and discounts of private placements––Evidence from listed companies in China |
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| Institution: | 1. Business School, Xi''an International Studies University, China;2. Sino-global Energy Enterprises Institute, Xi''an International Studies University, China;3. School of Management, Xi''an Jiaotong University, China;1. McDonough School of Business, Georgetown University, United States;2. The World Bank, United States;3. The Office of the Comptroller of the Currency, United States;1. School of Business, Beijing Technology and Business University, No. 33 Fucheng Street, Haidian District, Beijing 100048, PR China;2. School of Economics and Management, Beijing Jiaotong University, Jiaotong University Science and Technology Building 906, Shangyuancun 3, Haidian District, Beijing 100044, PR China;3. Rowe School of Business, Dalhousie University, 6100 University Avenue, PO Box 15000, Halifax, NS B3H 4R2, Canada |
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| Abstract: | This study investigates how ultimate owners' self-dealing motivations can affect seasoned equity offering (SEO) methods using the data on listed companies in China during 2006–2015. We find that public equity offerings conduce to enhanced ultimate owner's control and preserve the control structure of the issuers. Moreover, there is a significant positive relation between controlling shareholder's control margin and the likelihood of choosing a private placement. A firm is more likely to choose public offerings in the presence of multiple large shareholders. Further tests show that self-dealing motivations significantly affect price discounts of private placements. |
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