This paper empirically studies agency con?ict by using a shareholder approval rule gov- erning private placements. NASDAQ and other exchanges require shareholder approval for discounted, placements that make up more than 20% of existing shares. I document a distribution discontinuity around the threshold and identify many managers who avoid approval by keeping the fraction of new shares just below 20%. Shareholder avoiding ?rms have negative and 4.43% lower announcement day abnormal returns than ?rms that gain approval. Moreover, shareholder avoiding ?rms are less distressed and issue at higher discounts. Overall, my ?ndings suggest agency problems in privately issued equity.