Abstract: Social network has become an important way for network individuals to obtain resources. Institutional investors are the main recipients of the private placement in Chinese listed companies. A unique institutional investor network has been built among institutional investors by investing in a same listed company. The paper uses the social network analysis method to empirically study the impact of individual position characteristics (differences) on the private placement price. This study finds that the discount rate of private placement is significantly higher among the major shareholders and the associated parties, while is significantly lower among the institutional investors; the position characteristics of institutional investors are the important factors that affect the discount rate of private placement,the higher network centrality of the institutional investors leads to the lower discount rate of private placement, which verifies the Information Asymmetry Hypothesis;while the institutional investors with rich structural holes can obtain a significant higher discount rate during private placement, which conforms to the Transaction Cost Theory;in the case of the simultaneous participation of large shareholders and institutional investors, the network position of institutional investors has a more significant impact on the discount rate of private placement. At the point of the active investment characteristics of institutional investors, this study enriches the dimensions of describe institutional investors from the perspective of network characteristics, and verifies the social network channel effect of institutional investors, which is helpful to reveal the “black box” of market pricing in primary market.

Key words: private placement, discount rate, institutional investors, network centrality, structural hole