An Empirical Study on Market Reaction to Large Shareholder's Assets Injection through Private Equity Offerings

This paper investigates market reactions to events that listed firms purchase assets of large shareholders by private placements, and determinants result in market reactions. We use an event study analysis and a two-stage least squares approach to demonstrate whether the market responds to event and what cause the reactions. The results show that: first, the market reactions are significantly positive; second, the effects of information asymmetry are weak and uncertain; last, changes in ownership concentration are the most important determinant on market reactions.