The Research On Discount And Market Effect Of Private Placement In Chinese Market

Operating funds of the enterprise are the basis for business and survise,lack of that can stop the enterprise expanding or survising.In China,capital market is gradually improved,so it's about to establish the effective of market that has become more urgent cases, now we have more advanced and simple way on financing,so it'll have an unparalleled advantage for the expansion of enterprise and improving efficiency of company.Private placement in a listed company with a specific investment target for the shares issued to refinance in non-public way. Private placement comes from Europe and'America where have matured and developed capital markets, which is an important financial innovation, as a non-public way, in foreign countries it's similar to "private. " In China, private placement becomes more and more populer after that when the Commierssion issued the "Administrative Measures for the issuance of securities of listed companies" are listed in 2006.As a domestic and widely-used way of refinancing, the research on private placement in our country is still in the initial stage, there are still have many theoretical speculation defects and deficiencies. Therefore, the study of behavior of listed companies in the private placement has some practical value and practical significance:On the one hand, since private placement of listed companies in foreign country generate earlier, and its model of operation and relevant laws on regulations are already quite mature, but for Chinese listed companies,a huge gap between the capital market environment makes the private placement application is still in the exploratory stage, a variety of problems can not be effectively solved, coupled with the lack of domestic private placement of listed companies'conducting in-depth and systematic study, resulted to norm the way of private placement and promotion becomes more difficult. Therefore, that do research on strengthening the private placement price effect caused by the direct and indirect effects of wealth distribution, finding the improvement measures about placement of factors,improving the positive significance initiative is to improve the efficiency and vitality of capital markets, and promote a harmonious and effective fundamental guarantee.On the other hand,comparing with the large-listed companies of international companes, in Chinese stock-market, the vast majority of companies are SMEs, more suitable for financing by the way of private placement,so the role of private placement will become even more important in the future for to enhance the value of listed companies in China, the cooperation and competition about business strategy, to resolve investment and financing issues.Therefore, combined with impact of the issue price on many factors, for discovering the market effect about the private placement, whether it will give investors the misleading signals. On this basis,We can find the key factors of practical significance for further improvement of the market.Chapter 1:It's about the significance about the topic of this paper and the research background, domestic and international research on the status of private placement and profound significance of this issue.Chapter 2:Literature review from domestic and international of private placement in a detailed and summary angle,results from the price of foreign, defense theory, the ownership theory, information asymmetry, etc. to integrate the theory of the development process. And major literature in domestic tend to notice the pricing effects and announcement market effects, although our theoretical study is not yet mature, this paper documents do a comprehensive analysis.with the main findings untill now.Chapter 3:It's about the motives and the additional features and processes about placements detailed analysis and summary of the placement problem,which is the focus of concern. The placement of the deficiencies will be more helpful in future regulation.Chapter 4:It's empirical analysis and testing phase. Literature by summarizing the experience of the past and to find the main factors affect on private placement in discount, and we use multiple regressions to test assumptions; followed by the classical event study analysis of market reaction that before and after the private placement,that is the cumulative return rate and direction over relationship between the additional price, the signals of the market is positive or negative, investors acceptance of this act and for the future market expectations.Chapter 5:It's about the empirical results of the analysis.Through the goodness of fit between results obtained by the data and earlier assumptions, to test whether assumption is right,then detailed analysis of the data showed the overall relationship between each factor.of private placement and itself.Chapter 6:it's a summary of previous paper, theory and empirical analysis conducted after the conclusion drawn from this study and on future policy recommendations and limitations of this study.First, according to the statistical data show that privat placement in the company for the purpose of listed as a whole share is 29.9%, and the listed as a whole in China has become the dominant direction of the macro and micro, meanwhile it'll be the additional boost power. Although the needs of the market about that in terms of positive significance to a wide range of supervision, reling on its results so the actual asset quality are likely to be risen, but in this case, the company on how to maximize the benefits of the company, to avoid market in the abnormal fluctuation of the negative effects before and after the private placement market are equally important. This article put forward the relationship between listed as a whole and the discount is not difficult to see that the company used private placement to reduce competition in the market and insider trading restrictions, in this case, choose a higher ratio on discount will have little effect on the company's latter profit, balance, companies are wise not to give up the private placement.Second, With studying foreign capital market in full swing, Chinese capital market development is still at an early stage. Under the asymmetric information theory,we need efficient markets to correctly guide the pursuit of the investment behavior of participants,then the listed companies generally have greater financial risks.In the corporate governance measures, business strategy and cost of risk is an important indicator of budgetary considerations, to establish early warning models to prevent and seek to minimize the disadvantages, that is the ideal choice for many enterprises currently. Approach and a process directed by a relatively simple issue, lower cost of capital, and in terms of future action for the public can potentially bring the enterprise value growth. When the enterprisehave needs funds or the introduction of strategic investors and institutional investors, there is a golden opportunity to bring about development, not concerning about the risk of financial resources.Third, In China our companis inter control due to the dominance, excessive concentration, higher shareholder obtain private benefits of control, but too much control over the same time will undermine his private income.which in the governance structure is the most important, that's control structure of ownership. Because the number of shares in circulation increasing, control of the controlling shareholder will be diluted accordingly,so will make a threat to the control of individual shareholders, the role of the discount this time not so large, to maintain the interests of small shareholders. Refinancing behavior, private placement adjust the capital structure, to some extent to improve the performance of listed companies. When the issuance of private placement to certain shareholders of listed companies or associate stock issued,so shareholders vote on the plan when association involved should abstain from this, and further limits the acts of controlling shareholders.Fourth,The additional control variables for the Tobin Q regression analysis showed that the relationship between it and the private placement discount significant at 10%, indicating that the market investors maybe is not so concerning the enterprise level opposite the market development,the more importment is future development and profitability, so there wo should get a more effective profitability indicators,which on the future profit rely on the project or the introduction of strategic business partners, the strength of the level of institutional investors. To some extent,size of the company have impact on the level of discount, and represent a certain status in the market, but also demonstrate the company's financial strength, will give the market good signal transmission. As the financial crisis in China in recent years, the market in a downturn,level,stock prices more volatile, a reflection of the book value is not very sensitive.Externally, through this study the factors that affect the private placement is still diverse, although in 2006 China put forward measures to improve the system of private placement, only a limited number of normative issue of procedure, no description of minor. Placement of objects should be clear, the group classified, concerns related to the company's financial indicators, and more stringent requirements should be identified, diversion to ease implementation, individual supervision, at the same time should improve the transparency of information, market announcement in a timely manner, to avoid some of the "edge ball" luck, audit agencies issued regulations also have strict measures.Internally, we should improve the company's internal management practices, private placement is usually selected for financing, asset injection to achieve the overall market, the introduction of strategic investors or institutional investors, debt restructuring, the purpose of backdoor listing, then there should be required to have a sound internal control measures, at least the required number of internal audit, provisions of regulatory measures on the rights of independent directors and Board of Supervisors.Third, About the discount of private placement, the subscription ratio should be clearly defined sub-sectors, when the motivation is different, manipulation of the discount means is not the same, so we need to select the correct date as the base pricing date, is to choose the date of board resolution.the release day when non-public offering of listed company cum book date or a date shareholder resolution at General Assembly date, range of discount rates for review by the provisions, release on the object is also subject to review, to avoid damaging the interests of medium and small shareholders'.Fourth, That the study on private placement in foreign began earlier and bocome more mature theoretical structure and research forms, but the literature research on private placement in our country is relatively less, there is no advantage in theory, we should strengthen the theoretical and empirical analysis,put forword more practical and feasible method, which can further strengthen the market supervision.