Study On The Motivation And Economic Consequences Of Large Shareholders' Asset Injection For Listed Companies In China

At the beginning of establishing the securities market, many companies took segmental listing because the limited stock can't bear the shocks and pressures from the large listed companies. While segmental listing has made large assets related to the listed company business remained in their parent companies, which cuts off the chains of between listed companies and large shareholders, and brings a lot of problems. Usually, large shareholders'asset injection can deal with defects of segmental listing, and it is good for perfecting the listed companies'industrial chain. The government has promulgated a serious of policies and regulations to support asset injection. Lots of large shareholders have injected the stripping asset to the listed companies which they controlled. However, the large stockholders may inject inferior assets or inflate the value of injecting assets with control advantage because of the high concentration of shareholding, which will make adverse impact on listed companies. Therefore, studying the motivation and economic consequences of large stockholders'asset injection has important significances to realize the essence of asset injection and regulate the development of large shareholders'asset injection. By making use of integration theory of industrial chain and agency theory,combining with China's institutional background, the dissertation analyses the action of large stockholders'asset injection and the impact on listed companies, and reaches the conclusion that is large stockholders'asset injection with multifaceted nature. On the one hand, large stockholders'asset injection has a positive effect on listed companies, which can improve industrial chain, and reduce related party transaction between the listed company and its large shareholders and horizontal competition, and produce a series of synergy effect. On the other hand, it also has a negative side, which is that large stockholders may inject inferior assets or inflate the value of injecting assets or reduce private placement price by controlling advantage to obtain private interest, and then expropriate the interest of listed companies and minority shareholders. In addition, large shareholders'asset injection may be an opportunism behavior, which the purpose of asset injection is to achieve the aim of turning or avoiding loss by earnings manipulation. Thus, the motivations of large shareholders'asset injection can fall into three categories, which include integration motivation of industrial chain, tunneling motivation and target hitting motivation. On the basis of theoretical analysis, the dissertation has empirically tested three motivations by using the samples of 2006-2008 listed companies, which carry out large shareholders'asset injection successfully. It is found that asset injection scale is related to earnings management degree, and it is remarkable in the listed companies which are in need of turning or avoiding loss. Injected assets most are related to the areas of listed companies. Comparing with one year before asset injection, both related the ratio of transaction amounts to total assets and non-fair related transaction volume between large shareholders and listed company dropped significantly one year after asset injection, and it is particularly obvious in related asset injections. The value-added ratio of injected assets appraisal is overall high, it appears a significantly negative correlation between market response and value-added ratio; When combining asset injection with private placement, the shareholders subscribe for higher proportion, private placement price has more discount relatively market price, it appears a significantly negative correlation between market response and private placement discount. These findings separately verify the existence of integration motivation of industrial chain, tunneling motivation and target hitting motivation. Finally, the dissertation has empirically tested the listed companies'performances after large shareholders'asset injection. It is found that asset injection has a positive short-term declared effect. But in the long term, market performance is poor. Purchasing & holding abnormal return and long-term cumulative abnormal in 14th month after asset injection are negative and continue to decline, and CROA, ROE and ROA are all lower in the second year after asset injection than before asset injection. In addition, it is also found that long-term market performance of the listed companies is associated with the type of asset injection; long-term market performance of injecting related assets is better than the one of injecting unrelated assets. Financial performance indexes increase firstly and then decline, that is to say, they significantly increase in the year of asset injection and then begin to decline. The above findings indicate that, the tunneling may take a leading role in three motivations, large shareholders may inject inferior assets, investors don't fully identify the quality of injected asset in short-term; the type of asset injection is an important factor of influencing integration result of industrial chain, integration result of injecting related assets is better than integration result of injecting unrelated assets; at the same time, it also provides further evidence on target hitting motivation, the purpose of some asset injections is just to help the listed companies achieve the accounting profit of regulation requirement, that is to say, large shareholders'asset injection is sometime opportunism, which can not improve the financial performance of listed companies in long term, so financial indexes increase firstly and then decline. Based on the above study, the author suggests that the government should further encourage large shareholders to inject related & superior assets into listed companies, at the same time strengthen supervision on the quality of injecting assets to prevent the tunneling. Then the author gives some specific proposals: firstly, establishing classified Examination systems of asset injection and voting system of shareholders; secondly, perfecting the information disclosure system of asset injection; finally, clearing the transfer procedures and follow-up responsibilities of injected assets.