Price discount of private equity placement and wealth effects comparison between controlling shareholders and institution investors
In this paper, we propose a new wealth tunneling model between larger controlling shareholders and institution investors, and then analyze the related relationship between price discount of private equity placement and wealth-transferring effects. Price discount ratio and wealth transferring effects of private equity placement are closely related with subscribing private placement objects. Firm wealth transferring effects owned by larger controlling shareholders and institution investors exhibit an increasing trend with an increase of price discount ratio of private placement and the difference between share-subscribing ratio after private placement and original share-holding ratio owned by controlling shareholders and institution investors. In the event of larger controlling shareholders and institution investors participation, Larger controlling shareholders and institution investors have greater incentive to transfer firm wealth through private equity placement with an increase of the degree of interest deviation among larger controlling shareholders, institution investors and minority shareholders outside.