Study On Investor Behavior In Private Placement

The research on corporate decision-making mostly focuses on the non-optimal decision-making of company managers,controlling shareholders and other decision-makers,but there are few studies on the interaction mechanism between different types of investors and financial decision-making.The reason is that the interactive process between decision-making information and investors changes rapidly and is difficult to capture.In the capital market of China,the approval system is adopted for private placement,which shows the characteristics of long-term and multi-stage.The information of financing decision-making changes slowly and is gradually clarified from the initial announcement stage to the final announcement stage.The natural environment of slowly changing information makes it possible to study the complex dynamic relationships between the changes of market microstructure characteristics and investor behavior patterns in the process of decision-making information diffusion.Based on the recent research on the interaction mechanism between investor behavior pattern and financial decision-making,three research directions are proposed in this paper: complex dynamic relationships between the changes of market microstructure characteristics and investor behavior patterns;differences in the recognition abilities of different types of investors for information details and their impacts;and the impact of different types of investors on corporate decision-making.At first,using the natural environment of slow and dynamic change of complex information created by the long period and multi-stage characteristics of private placement under the approval system,we find that the release of private information by informed traders is the starting point of information diffusion process.Through the changes of market microstructure characteristics,the information is first transmitted to institutional investors with learning behavior,and then to individual investors.Institutional investors receive,process and utilize market microstructure information and public information,while individual investors only respond to public information.The changes of market microstructure are the bridge of information exchange between different investors.In addition,individual investors show information identification deviations in the initial stage of information diffusion process,and show inadequate responses in the middle and late stages,whose behavior deviations show dynamic changes.Secondly,using a large number of different types of private placement failure samples,the ability of individual investors to interpret complex information is studied.The results find that individual investors treat different types of issuance announcements equally,do not distinguish the reasons for the failure of issuance,and have insufficient knowledge.Besides,the differences between information cognitive ability of different investors are the driving force of information diffusion,making the interaction among information,market microstructure characteristics and investor behavior inconsistent in the early and late stages of information release.Finally,using multiple samples of private placement,the “opportunism” tendency of private placement companies in the use of fund-raising is examined.The study finds that institutional investors have a significant deterrent effect on the “opportunism” tendency of listed companies,and will express their feedback to company financing decisions by influencing private placement cost.However,individual investors mainly express their feedback by influencing the pricing standard,which provides the soil for the “opportunism” tendency of listed companies.The key contributions of this paper are as follows: the dynamic diffusion process of gradually revealing information in the market is studied and the behavior patterns of various types of investors in different stages of information disclosure.Besides,the dynamic changes of investor behavior deviation are emphatically analyzed.The study in this paper not only provides empirical evidence for the theoretical analysis results of the information diffusion model,but also makes up for the lack of attention to a variety of irrational investor behavior in the theoretical model.