Refinancing Choice And Market Reaction Of Chinese Listed Firms

Share placing and rights offering are the two dominant equity offering strategies in China. Prior to 1998, rights offering are the main refinancing method. However, currently, share placing became most popular considering both number of issues and scale. In this study, we examined valuation announcements effects of both refinancing methods for listed firms in China. Our results show that there is an obvious positive market reaction to the announcement of refinancing. We also find that the positive excess return of share placing is larger than that of rights offerings. We also studied relationship between excess returns and ownership concentration, institutional ownership and price discount.