Private Placement in Malaysia

Abstract

By focusing on the private placements in Malaysia, the study examines the role of audit quality around the settlement period of private placement, which has been ignored in the previous studies. The finding reveals that the audit quality is an important variable to the price reaction. Using 142 private placement observations for the period 2002 to 2012, this study investigates the market reaction to the announcement of private placements around several important dates: the announcement period and the settlement period, and reports that market reacts more positively to the Main Market and ESOS prior to private placements during the settlement period. Nonetheless, this study also examines the factors to determine the price subscription and finds that the low quality firms with the low ownership structure, low information asymmetry, high risk and low offer proceed are more likely to offer premium subscription price.