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- Title
RAISING CAPITAL WITH PRIVATE PLACEMENTS OF DEBT.
- Authors
Szewczyk, Samuel H.; Varma, Raj
- Abstract
In this study the role of private placements of debt in the capital acquisition decision of public utilities is investigated. Whereas public offerings are sales of securities through financial intermediaries to the public-at-large, private placements are direct sales of securities by an issuing corporation to a limited number of institutional investors. In contrast to the negative stock price reactions typically found for public security sales, private placements are associated with significant positive abnormal returns in the shares of the issuing public utilities. Also, larger private placements appear to elicit a more favorable market response. Results are consistent with reduced information asymmetries and increased monitoring of the issuing firm resulting from the private placement.
- Subjects
FUNDRAISING; PRIVATELY placed securities; PUBLIC utilities; GOVERNMENT securities; INSTITUTIONAL investors; STOCK prices
- Publication
Journal of Financial Research, 1991, Vol 14, Issue 1, p1
- ISSN
0270-2592
- Publication type
Article
- DOI
10.1111/j.1475-6803.1991.tb00640.x