Effects Of China Listed Companies'Refinancing Have On Company Performance

Object of this research is the relationship between ways of refinancing and company performance. Listed companies in China show strong preference for equity refinancing, so the author only study what effects equity refinancing including share placements, increasing issues and issuing of convertible bonds has on company performance.There has always been controversy about which way is the best of refinancing. Based on former literatures and realities in China, this article choose A-share market of non-financial listed companies which refinanced by share placements, increasing issues or issuing of convertible bonds from 2001 to 2006 as research samples, and compare effects of different equity refinancing ways have on company performance in order to reflect situation of refinancing market and hope to provide some valuable suggestions for government, company financing management and investors.This article researches relationship between ways of refinancing and company performance from both qualitative and quantitative aspects. As to quantitative research, the author applies multiple regressions to establish research model with regarding to other factors that maybe influence company performance. Statistical analysis shows that before refinancing, companies that choose share placements have the best performance, and companies that choose issuing of convertible bonds perform worst. After refinancing, each company performs worse than before. Performance of companies refinancing by increasing issues have the smallest decline, while performance of companies that choose issuing of convertible bonds have the biggest decline, even though decline level between issuing company and share placements company is not significant. Results of multiple regressions are consistent with statistical analysis. Refinancing by increasing issues is positively related to company's performance. So, the author think company should take increasing issues as the first choice while refinancing, and then share placements, last choice is to issue convertible bonds.Considering results of this research and the reality of China's stock market, the author make some suggestions as follows: (1)to complete share placements mechanisms and encourage private placement; (2) to enhance management before and after refinancing of listed companies; (3) to develop the capital market and broaden channels for financing of listed companies.