An Empirical Study On The Price Discount And Long-Run Market Performance Of Equity Private Placement In Chinese A Share Market

Private placement was introduced into china on 8 May 2006,since then,a fever of private placement by public firms had appeared in china.Nowadays,private placement has already became the most important measure to refinance.However,the motivation of the private placement in Chinese A share market is still controversial, most of the relevant research focus on the theoretical analysis and case study,there is seldom empirical study in this area.This paper is an empirical study on the motivation of the private placement in Chinese market,based on the methodology of "Event Study" and" Descriptive Analysis".Choosing 127 stocks of listed corporations involved in the private placement as the sample,we concluded that:the certification hypothesis could explain the motivation of private placement in Chinese market well,and it's also proved that the private placement caused significant positive long-run abnormal return,which is the most important evidence to oppose the managerial entrenchment hypothesis.Because of the sample quantity insufficient reason,we had not eliminated the stocks with important events after the private placement,and we did not study the data after the year of 2007.This may be the deficiency of this paper.