The Study Of Seasoned Equity Offerings In China

In muture foreign capital market, SEO is the main form of refinancing for listed companies. According to statistics, more than 80% of refinancing in American use the form of SEO. In China SEO is also an important method of refinancing for listed companies. And in the future SEO will play an important significant role in the stock market of China with the development and innovation of our nation's economy. But because of the traditional method of pricing SEO have some kinds of unreasonable, the securities always come into the stock market with a higher price than their intrinsic value. As a result, the news of SEO was once the reason for falling of stock price. To sum up, there should be an effective method of princing for SEO which is significant for the investor's wealth, So it is important to improve the SEO of listed companies and the stabilization of the stock market.First part of this paper is brief introduction about the history of SEO in China, and the change of the method in princing SEO, then this paper introduces several ways in which SEO is priced and analyze the characteristics and applicability of them. The current belief is that the SEO pricing process is a game between old and new shareholders on their benefits change. Based on this game, the pricing and capital stock of old and new share is set up under the principle of Nash Equilibrium. Under this principle, the pricing models of SEO is set up under full circulation and non-tradable share respectively. Then the Empirical study is done on the data of SEO corporations, From the results we can receive a conclusion that the price of SEO is always overvalued and this overvaluation is a reason of equity refinancing preference.At last, there are several recommendations which based on the conclusions reached in this paper about the SEO of listed companies.