Chinese A-share Listed Company Equity Refinancing Value Creation Evaluation Studies

China's listed companies strongly prefer to SEO. Therefore, domestic scholars always pay more attention to the efficiency of SEO. Many existing research literatures show that, value creation evaluation is a very important aspect of the efficiency analysis of SEO.Although the existing literatures which deal with value creation evaluation of SEO have obtained abundant conclusions based on many different indices, they still have many limitations. More specifically, in order to simplify the research or due to the study perspective, almost all of the existing literatures evaluate value creation of SEO indirectly (instead of directly), which may reduces information quality of the existing conclusions to some extent. For example, some studies evaluate value creation of SEO by means of excess return rate of stock or financial indices such as ROE, EPS, and EVA. However, stock excess return is affected by both stock value and some other factors such as the irrationality of investors. In addition, financial indices such as ROE, EPS, and EVA are affected by both stock value and other factors such as shocks in demand of the companies' product market.Unlike the existing literatures, the dissertation tries to evaluate value creation of SEO of A-share listed companies directly, and from the perspective of security market supervisor. Therefore, the dissertation provides direct evidence for efficiency evaluation of SEO of A-share listed companies. Concretely, since one of the main aims of the supervision authorities is to protect investors' benefits, this dissertation primarily investigates whether the behavior of SEO of A-share listed companies has created value for shareholders or not, that is whether the current value of cash flow of equity increased by SEO exceed the financing capital or not? How much?Firstly, the dissertation establishes an index which is used to measure and assess value creation of SEO. The index is called the function of value creation of SEO. There are similarities and differences between the function of value creation of SEO and the existing assessment indices. The similarities lie in: (1) Both the existing assessment indices, such as excess return rate of stock, ROE, EPS and EVA, and the function of value creation of SEO can examine the efficiency of acquirement and use of funds. (2) Both the existing assessment indices, such as excess return rate of stock, ROE, EPS and EVA, and the function of value creation of SEO can assess value creation of SEO of other countries or regions. The differences are as follows: (1) Since the function of value creation of SEO is established according to the definition of value creation of SEO, it is a more direct assessment index compared with excess return rate of stock, ROE, EPS and EVA. (2) The function of value creation of SEO establishes a function relation between value creation of SEO and its determinants.Secondly, based on the function of value creation, the dissertation studies the determinants of value creation of SEO in theory. The results indicate that: (1) The variables which are included in the function of value creation of SEO, as well as their own explanatory variables are determinants of value creation of SEO. (2) Those variables which are included in the function of value creation of SEO affect value creation of SEO directly. (3) The adverse selection problem and the principal-agent problem are two main indirect determinants of value creation of SEO. (4) The function of value creation of SEO provides a possible solution for us to analyze the comprehensive influence of some factors on value creation of SEO. The above study is helpful for us to provide explanations and putting forward corresponding policy suggestions.Thirdly, in order to estimate those parameters included in the function of value creation of SEO, the dissertation establishes a model, which is called the parameter estimation model for short, and gives the steps of estimation and test under two different sample data conditions. Concretely speaking, this dissertation establishes the so-called parameter estimation model by analyzing the relationship between parameters in the function of value creation of SEO and some observable variables, such as enterprise investment expenditure and financing scale as well as.Fourthly, this dissertation evaluates the value creation of SEO of A-share listed companies, by using the function of value creation of SEO, the parameter estimation model and sample data. (1) The results obtained by means of vertical comparison show that: 2000-2005, the value created by SEO of A-share listed companies is very limited. On the contrary, SEO damages equity value, and the annual mean value is between -1.06 and -1.02. The main reasons are as follows: There exists excessive investment behavior of SEO companies; The direct cost of SEO is high, and a quit part of the direct cost is what the listed companies are reluctant to promulgate; The problem of principal-agent of free cash flow is serious. (2) The results obtained by means of horizontal comparison show that: The value created by SEO of A-share listed companies during 2000-2005 is very limited, while the value created by SEO of Hong Kong listed companies in 2006 is much higher. Although the behavior of SEO of Hong Kong listed companies decreases equity value too, the annual mean value is between -0.75 and -0.73. Since that of A-share listed companies is between -1.06 and -1.02, their quantitative difference is 0.27—0.33. The main reasons include that the problem of excessive investment and free cash flow of A-share listed companies are much serious than those of Hong Kong listed companies, and the former's direct cost of SEO is higher than that of the latter.Based on the dissertation's evaluation conclusions, we put forward relative policy suggestions: (1) Improving the information disclosure system of raised funds, so that the external investors can know the use of the funds, progress of investment, plan of benefit and situation of management. (2) Enhancing the supervision and management of illegal activities which may occur in applying for qualification of SEO, and equity issuing. (3) Encouraging listed companies to increase the level of dividend, and to perfect the structure of corporation governance.