The Role of Information Asymmetry in Private Placements - Evidence from Norway

Abstract

This thesis examines private placements on the Oslo Stock Ex- change. We study the issuing rm's announcement statements, post-issue rm performance, and the market reaction to disclose the role of asymmetric information in private placements. We nd that the market reacts more favorably to rms that reveal speci c information about their intended use of proceeds. However, we do not nd evidence indicating that speci c rms are more likely to engage in value-maximizing projects than rms that are vague. Previous literature has explained an adverse market reaction to SEOs using the agency theory, market timing, and the pecking or- der theory. We do not nd convincing support for either theory. Thus, our ndings indicate a market ine ciency left unanswered for future research.