Empirical Study On Announcement Effect Of The Equity Private Placement Of China's Pubilc Companies

Since equity private placement was adopted in China , it has been getting popular rapidly and become an important way of equity refinancing for Chinese listed companies. Be opposite to the public offerings, announcements of equity private placements generate positive stock price effects. The announcement of the equity private placement is defined as the market reaction on each of the announcement date for transaction.This paper chose the listed companies that start equity private placement from the eighth , May, 2006, the day begins ,as the samples. By using the methods of the event study, we examines the announcement effect of equity private placement and find some factors that influence the announcement effect.At first, we review the foreign and domestic documents of equity private placement , then examines the abnormal return and cumulative abnormal return of the event date, and find some factors that influence the announcement effect. Regarding these factors as independent variable , and abnormal return on announcement day as dependent variable, we establish a linear regression model. We analyze the market reaction on the announcement dates of the Directors'Board Meeting , the Shareholders'Board meeting, the China Securities Regulatory Commission's permission ,and the completion of the equity private placement. Our study finds that, there is a significant positive announcement effects on the four days. We also find that the announcements effects weakens as the process of the equity private placement goes on. The regression results show that, the ownership concentration in the range(>25%), the growth opportunities, financial restructuring and the share change of the largest shareholder have significant positive effect on the discount-adjusted abnormal return.