Abstract：This paper theoretically analyses and empirically examines how investor heterogeneous beliefs affect private placements of equity discounts in the full circulation era by employing the sample of A-share listed firms with private placements from 2006 to 2012. The results show that investor heterogeneous beliefs affect private placement discounts. If the issuance targets are institutional investors, the market discounts of private placements are more negative as the dispersion in outsider beliefs is greater. But when the issuance targets are large shareholders, the situation is just the opposite. Moreover, the same conclusion is in accordance with cumulative abnormal return.
Keywords: Investor Heterogeneous Beliefs, Private Equity Placements, Market Discounts
source:Finance & Trade Economics ,No2,2014