Equity Financing Market Reaction And Special Ownership Structure Research

Upon the experience of capital markets all over the world, the appropriate volume and timeliness of seasoned equity offerings are the vital premise for the healthy and stable development of capital markets. However, the empirical studies showed that most of the listed companies' long-term performances are even worse after their seasoned equity offerings. It is named as "The New Issues Puzzle" by many researchers.In China's domestic capital market, the listed companies are also inclining to execute equity financing more than liability financing. Meanwhile, there are obvious earnings management and descended performances between these companies, which together with declining market reflection around the announcement. This paper tends to believe that these are related to the high equity centralization of the companies and the invasion by the controlling/un-exchanged shareholders. So the main point of this paper is to find out the relationship between the market reflection and the special structure of the equity conceived by the investors.After controlling the pricing, volume and previous performance of the SEO companies, the results of empirical research reveal that the declining market reflection has significant relationship with the special structure of equity in China, which is consistent with our premise. This can also be considered as capital market investors are aware of the structure of the companies' equity and the tendency of controlling/un-exchanged shareholders' invasion.The contribution of this study is mainly on the policy suggestions for the regulator to improve the mechanism of protesting minority shareholders, and the listed companies to establish integrated corporate governance.