| Summary: | 碩士 === 國立成功大學 === 國際企業研究所碩博士班 === 95 === Private placement is one sort of equity financing which sell to single or small group of investors such as institutional investors. Prior evidence suggested that public firms placing equity privately experience positive announcements effects, with negative post-announcement stock price performance (Hertzel et al., 2002) However, there is no behavioral theory which can explain why investors would systematically react in the opposite direction to an announcement of private placements. Since investors' behavioral and expectation can not be predicted, we attempt to use the viewpoint of analysts to explain the negative post-announcement effect of private placements. Meanwhile, analysts reflect or drive investors' expectations. Moreover, we can find much evidence that analysts tend to be overoptimistic, and overoptimism may be related to a negative post-announcement. Therefore, in this study, we will examine whether there are overoptimism among analyst following of private placement, and whether there are relationship between analyst following and negative post-announcement effect.
We collect 759 announcements of private equity placements during 1984 to 2003 from SDC database and we obtain the analysts' forecast data from IBES database. Our results suggests that there may be overoptimistic among analysts when the announcement of private equity placements. Besides, we adopt two methods and find a negative post-announcement of private equity placements. Moreover, we conduct three methods and find an inverse relationship between analysts' following and the long-run performance of private equity placement. This evidence indicates that the more overoptimism of analysts’ following, the worse the long-term performance of private equity placements will be.
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