Impact of entrenched ultimate owners' self-dealing on SEO methods choice and discounts of private placements-Evidence from listed companies in China

摘要

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.