The Analysis Of Investment Effect Of Private Placement Of Public Companies In Domestic A-share Market

Private placement, also named non-public offering, same as publicissuance, allotment and warrant, is one way of equity financing for listedcompanies. Since China Securities Regulatory Commission publishedAdministration of Securities Issuance of Listed Companies on May8th2006, private equity placement has developed rapidly and has become themost important way of equity refinancing for listed companies indomestic A-share market. Meanwhile, the investment effect of privateplacement makes it a focus of capital market and tremendously influencesits sustainable development.Firstly, we review abroad and domestic research papers on privateplacement and clarify its principles, procedure and development. Weselect709public companies who offered private placement from January2006to December2011to analyze the issue discount effect. We find outthat the average offering price is higher than basis price and about30%off compared with tradable price in secondary market. Then, to analyzethe investment effect, we select352public companies who made privateplacement from June2006to December2012and all the stocks are tradable for at least90days before March302012. With the samples, wepick up the variables and establish multiple linear regression equation forregression analysis. The result indicates that the issue discount andA-share market condition take the most important effect on theinvestment efficiency of the private place and there is a significantpositive correlation between them.Finally, we present some advices to policymakers, institutionalinvestors, medium and individual investor.