An empirical analysis of the characteristics and motivations of listed companies raising capital through private placements

Abstract

Although private placements have been possible in France since January 22, 2009, they have attracted no academic attention. In line with recent literature on private placements elsewhere, we investigate the scope of the phenomenon in France together with the characteristics of firms engaging in them. The results show that private placements outnumber more traditional public fundraising methods, justifying our interest in them. First, we conduct an event study that reports no evidence of a
positive abnormal return. Second, we conduct logistic regressions to determine in what instances firms seek private placements. The results reveal that firms open to private placements are characterized by high information asymmetry. Financial difficulties or the search for specific stock market reactions do not justify their use.