TY - JOUR
T1 - Why do firms underwrite private placement shares of other firms? Case of Japanese firms
AU - Otsubo, Minoru
N1 - Publisher Copyright:
© 2016 Elsevier B.V.
PY - 2017/2/1
Y1 - 2017/2/1
N2 - This paper focuses on listed firms as underwriters of private placement shares in Japan and investigates why they underwrite equity of other firms through private placements. In private placements, underwriting firms cannot necessarily enhance their shareholders’ wealth, unlike the case of issuing firms, because they must incur costs associated with financial support through underwriting. However, they can enhance wealth when they acquire the control rights of issuing firms with a plan of business alliances after private placements. This result indicates that underwriting firms underwrite other firms’ private placements to obtain a synergistic effect after acquisition of the control right.
AB - This paper focuses on listed firms as underwriters of private placement shares in Japan and investigates why they underwrite equity of other firms through private placements. In private placements, underwriting firms cannot necessarily enhance their shareholders’ wealth, unlike the case of issuing firms, because they must incur costs associated with financial support through underwriting. However, they can enhance wealth when they acquire the control rights of issuing firms with a plan of business alliances after private placements. This result indicates that underwriting firms underwrite other firms’ private placements to obtain a synergistic effect after acquisition of the control right.
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U2 - 10.1016/j.pacfin.2016.12.006
DO - 10.1016/j.pacfin.2016.12.006
M3 - Article
AN - SCOPUS:85009205131
SN - 0927-538X
VL - 41
SP - 75
EP - 92
JO - Pacific Basin Finance Journal
JF - Pacific Basin Finance Journal
ER -