The initial private placement of equity and changes in operating performance in Taiwan |
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Authors: | Hsu‐Huei Huang Min‐Lee Chan |
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Institution: | 1. Department of Finance, National University of Kaohsiung, Kaohsiung, Taiwan;2. Department of Finance, Providence University, Taichung, Taiwan |
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Abstract: | We propose the corporate governance hypothesis which suggests that the outside blockholders arising from the private placement of equity are more likely to have a significantly positive effect on firms with poor corporate governance. Using a sample of Taiwan‐listed firms with initial private placements of equity, our study’s results indicate that an improvement in operating performance is more likely to be seen after a private placement for those firms that are without independent directors, are controlled by a family, have lower insider shareholdings or are characterized by a pyramidal ownership structure. These findings are consistent with our hypothesis. |
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Keywords: | Private placement of equity Corporate governance Agency problem Board composition Ownership structure G32 G34 |
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