کنترل شرکت، قیمت گذاری مورد انتظار و انتخاب مکانیزم انتشار اوراق در بازارهای سهام غیرفصلی

Using unique Australian data we examine the choice of issuance mechanism for unseasoned equity (between initial public offers and direct placements) prior to exchange listing. Controlling for liquidity in the decision to go public and incorporating interrelated decisions, we find that corporate control concerns and expected underpricing differences between initial public offers and direct placements play an important role. Also the probability of an initial public offer (direct placement) decreases (increases) with information asymmetry and the reputation of the issuer. Further, the choice of issuance mechanism and the underpricing, issue size and ownership retention decisions are interrelated.

Although there is an extensive empirical literature on reasons for going public and the underpricing of initial public offers,1 little research has been undertaken on the choice of issuance mechanism2 in unseasoned equity markets. This is attributable, in part, to the U.S. Security and Exchange Commission's Rule 144 which limits privately issued equity from being publicly traded for 2 years.3 Consequently, the choice of issuance mechanism for unseasoned equity in the U.S. is conditional on the exchange listing decision (Lerner, 1994 and Corwin and Harris, 2001). However, Australia provides a unique opportunity to study the choice of issuance mechanism in an environment that does not inhibit the trading of privately distributed equity. Upon listing, both initial public offers and direct placements may be traded in the Australian secondary market.4 Consequently, the regulatory environment allows an examination of the choice of equity issuance mechanism while controlling for exchange listing and secondary market liquidity.5 Although there is an extensive literature dealing with the choice of issuance mechanism in debt markets,6 unique features of the equity markets may influence this decision. For example, Brennan and Franks (1997) suggest that the choice of issuance mechanism in unseasoned equity markets is affected by the desire of owners to protect or reinforce their control in the firm and/or to avoid hostile takeovers.7 As direct placements are marketed on an ‘invitation only’ basis to a select group of investors, they may be used to target particular shareholders or shareholder characteristics for corporate control purposes. Alternatively, initial public offers may be used to distribute shares diffusely to protect the relative control of the owners after exchange listing. Another distinctive feature of equity markets that influences the choice of issuance mechanism is the underpricing of unseasoned equity issues. While both initial public offers and direct placements are significantly underpriced, direct placements typically are more underpriced than initial public offers.8 Moreover, Maksimovic and Pichler's (1999) model of financing choice between initial public offers and private placements of equity predicts that, in the presence of adverse selection risk, firms choose public issues to avoid underpricing. We draw on these distinctive features to develop and test a model of the determinants of the choice of issuance mechanism by Australian firms raising unseasoned equity before exchange listing. Our focus is on two key questions. First, does the desire by founding shareholders to retain corporate control or avoid hostile takeovers affect the choice of issuance mechanism? Second, does the expected difference in underpricing between initial public offers and direct placements affect the choice of issuance mechanism? Our model is developed in Section 2. It draws on the theoretical literature relating to corporate control by founding shareholders, underpricing of unseasoned equity issues, asymmetric information and issuer reputation, and the role of underwriters in the issuance process. We describe our data and estimation technique in Section 3. Using a sample of 983 unseasoned equity issues undertaken by Australian firms in the 6 months prior to exchange listing, we apply the instrumental variable logit regression technique. This accounts for the dichotomous dependent variable and the interrelated issuance mechanism, ownership retention, underpricing, underwriting, and issue size decisions. Our results are presented in Section 4 and the paper concludes in Section 5.

Using a unique data base of Australian unseasoned issues, we examine the determinants of the choice of issuance mechanism when both mechanisms lead to exchange listing. As the U.S. SEC's Rule 144 restricts privately issued equity from being publicly traded for up to 2 years after issuance, firms that make private placements of unseasoned equity remain privately held while, by definition, those that make initial public offers go public. Thus, in the U.S., the going public decision and the choice of issuance mechanism are intertwined. In the absence of any requirement similar to Rule 144, Australian issuers of privately placed unseasoned equity can have those shares listed and traded without restriction. Consequently a sample of Australian unseasoned equity issues allows us to study the choice of issuance mechanism while controlling for post-listing liquidity. This is achieved by focusing on a sample of initial public offers and direct placements of unseasoned equity made by publicly listed firms in the 6 month period prior to their exchange listing. We extend the existing literature on the choice of issuance mechanism by incorporating important features of equity markets including corporate control considerations, indirect flotation costs of underpricing, and the underwriting decision. A major methodological contribution of the study is our modeling of the choice of equity issuance mechanism within a simultaneous decision framework. Because the choice of issuance mechanism is determined simultaneously with the issue size, ownership retention, and underwriting decisions and with the expected level of underpricing, our discrete choice logit model uses an instrumental variable estimator to account for the interrelated decisions. We find that corporate control concerns surrounding post-listing ownership structures, and indirect flotation costs measured by relative levels of underpricing, affect the choice of issuance mechanism. When founders retain a low level of ownership in the firm there is a greater probability of a direct placement, consistent with control being maintained by delivering large blocks of shares to select shareholders with similar interests to the founders. Additionally, our results are consistent with the choice of issuance mechanism being cost sensitive, as the probability of a firm choosing an initial public offer is inversely related to the expected initial public offer/direct placement underpricing differential. Furthermore, consistent with debt market explanations linking the choice of issuance mechanism to information asymmetries, we find that firms with more transparent operations have a greater likelihood of choosing an initial public offer. An important difference between our results and those of debt market studies is the influence of issuer reputation on the choice of issuance mechanism. Whereas the debt market literature suggests that firms with more established reputations have a preference for public issues, in the Australian unseasoned equity market we find that they prefer direct placements. This is consistent with the hypothesis that, in unseasoned equity markets, firms with less established reputations choose initial public offers to enhance the marketing of their products and services. Finally, the results support our methodological approach of modeling equity issuance choices within a simultaneous decision framework. We find the choice of issuance mechanism is interrelated with the issue size, ownership retention and underpricing decisions, though not with the underwriting decision. The finding of interrelated decisions in the unseasoned equity market mirrors that of Dennis et al. (2000) in syndicated loan markets.