Why do firms underwrite private placement shares of other firms? Case of Japanese firms

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)75-92
Number of pages18
JournalPacific Basin Finance Journal
Volume41
DOIs
Publication statusPublished - Feb 1 2017

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Private placement
Japanese firms
Underwriting
Control rights
Wealth
Financial support
Costs
Japan
Alliances
Underwriters
Shareholder wealth
Equity

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

Why do firms underwrite private placement shares of other firms? Case of Japanese firms. / Otsubo, Minoru.

In: Pacific Basin Finance Journal, Vol. 41, 01.02.2017, p. 75-92.

Research output: Contribution to journalArticle

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