The Empirical Study On Private Placements And Corporate Long-run Performance In Chinese Listed Companies

With the development of china's securities market, the SEO (Seasoned equity offerings) of Chinese listed companies is expansion. Before the shareholder structure reform, Public re-issuing new shares and Rights offering are the two main types of listed companies refinancing equity method. As equity division reform smoothly finished, The China securities regulatory commission promulgated and implemented the"Administrative Measures for Listed Companies Stock Issuance"on May 8, 2006, and Private Placements becomes the formal way of SEO. Because the private placements has the advantages of the low doorsill and cost financing, the high efficiency, short issuing period and other advantages, and quickly became the main method of equity refinance after the reform of non-tradable shares of stock right in China. By the end of 2007, there are about a total of nearly 200 listed firms conduct private placement and the stock market set off a wave of private issue.To combine the study, we found that the research of private placements focuses on the announcement effects, discount, the benefits transfer and the short and long performance. Because the private placement appeared in large scale is late in our country, our experts and scholars focused on the announcement effects, discount, the benefits transfer and short-term performance and price effects, but there are few empirical study on the long-run performance of private placements. This paper attempts to study the effects of private placements'objects, the subscription to raise fund, the size of offering shares and scale of raise capital, on the long-run performance of private placements.The paper uses the method of theoretical analysis and empirical analysis, and review the domestic and foreign literature. Combine the special situation of Chinese securities, we analysis the effects of private placements on the companies'long-run performance from information asymmetry theory, signal transmission theory and the agency cost theory. Then, according to the theoretical analysis, we put forward the research hypotheses, and selecting 185 cases already completed private placements from 2006 to 2007 as a sample, and study the effects of the characteristics of private placements on the long-term performance. The results show that: (1) the long-term performance after private placements isn't improved, but worsened; (2)The private placements objects hasn't significant impact on the long-term performance; (3)the long-run performance of listed companies, which is cash subscribe, is significantly better than the firms of non-cash subscribe; (4)The scale of raise funds in private placements and the company's long-term performance exist obvious negative correlation; (5)The influence of issue size on the long-run performance is not significant. The result show the private placement doesn't bring the improvement of the long-term performance of listed companies, and the reason is that private placements may existed benefits transfer behavior and the raising capital is not reasonable used.