| May 2006, China officially issued the private placement system. Up to June 31 2010, nearly 533 listed companies implement the private placement financing in the A-share stock market. More and more investors choose the private placement financing, also make private placement become an important kind of refinancing ways in the listed companies. Private placement provides the listed company new approach and method through adding new strategic investors, introducing new assets, mergers and acquisitions; helps the listed company to list as a whole; solves the related transaction and competition issues; raises the quality of listed companies. This private placement financing is accepted by more and more listed companies, but it gradually reveals some problems, especially in the private placement offering price and the pricing efficiency.The SEC issued the "Administration of Securities Issuance", regulating "non-public offering price is not less than 90% of the average of 20 trading days’ prices before the pricing benchmark". In this context, some controlling shareholders of listed companies will join the managers and institutional investors to reach a "Collusion " interest. They take advantage of their information to manipulate the share price of 20 trading days for transferring their benefit.To further enhance the operability of private placement, September 2007, SEC promulgated the detailed implementation rules for the non-public issuance of stocks of listed companies. The purpose of the major asset reorganization and the introduction of long-term strategic investment take a different price from the purpose of raising funds. This leads to major shareholders involving the pricing issue obtaining a different share price from the specific object participating in the auction price.From 1 January 2006 to 2010 July 31, there are 533 listed companies implementing private placement directional seasoned, its discount rate up to 34.32%. It’s significantly higher than discount rate of the overall 20.14% in the research of Hertzel and Smith (1993) and discount rate of 18.7% in the research of Holderness Barclay, Sheehan (2006). Offering price low and less efficient become an effective means for the controlling shareholder to grab additional private benefits, which exposes there is a big flaw in the current private placement pricing mechanism, the need for improvement and optimization.So what reason forms high discount of private placement and low efficiency? What are discount factors of private placement in view of Asymmetric information theory? What kind of pricing mechanism can effectively guarantee pricing efficiency? These are the major theoretical and practical issues to discuss and resolve. Answers to these questions, not only help us to deeply understand the formation mechanism of the current inefficient private placement pricing,construct perfect theoretical framework of pricing mechanism, but also quite important to promote the secondary market’s stability; enhance the independence of listed companies; broaden the financing channels of listed companies; protect the lawful rights and interests of small and medium shareholders and promote the healthy and orderly development of capital market.This paper is divided into seven parts, tightly around the relationship between private placement discount of listed companies and quantitative indicators of asymmetric information. The main content of this article can be summarized in the following several parts:PartⅠ:The significance and background of the study. This part illustrates motivation and purpose, structure and research process, innovation of the research.PartⅡ:literature review. This part illustrates the domestic and foreign relevant literature, and analyzes and compares them.PartⅢ:This part illustrates China’s private placement financing system and the function of private placement, and then analyzes the advantages and disadvantages of private placement.PartⅣ:Analyze the reasons for low efficiency of private placement in the perspective of multi-agent game.PartⅤ:This part illustrates the theoretical perspective-information asymmetry theory, in order to find quantitative indicators of the theory of asymmetric information for the empirical part of this paper. PartⅥ:Empirical research. This part illustrates descriptive analysis of the collected samples, descriptive statistics analysis, and multiple regression analysis of private placement discount factors from the perspective of asymmetric information.PartⅦ:Conclusions and recommendations. based on the hypothesis and the empirical results of this study, this part makes comprehensive conclusion and recommendations, and finally puts forward the possible development of future research.Throughout the study, this paper makes a contribution in the following aspects:1. Most of the articles less research relationship about asymmetric Information and pricing discount of the private placement. They only study placement discount from the perspective of regulation theory. This paper collects nearly 5 years’data of the listed company as a reference index to research the factors influencing the pricing discount based on asymmetric information theory.2.In recent years, there are more than 500 listed companies implement private placements. These listed companies are the main force of Chinese economic development, their issuing and market performance after issuing of private placement affect the development of Chinese securities market. Therefore, it’s urgent that how to formulate the reasonable pricing mechanism system of private placement pricing, and then make a healthy and stable development of the listed company. The urgent need of practice gives this study special significance.3. Drawing on previous research, this paper proposes the empirical model about information asymmetry and the private placement discount. With the characteristics of listed companies, the model introduces the rate of revenue growth, book value, and financial distress as control variable, to expect to obtain more rigorously empirical results.4. This paper studies the related factors affecting private placement discount based on the information asymmetry perspective. The results shows that the information asymmetry is the important factor affecting private placement discount-the higher degree of information asymmetry, the higher level of private placement discount. Meanwhile, because the writer’s knowledge structure and ability is limited, this research also exists the following inadequate:1. This samples of empirical analysis are 354 samples selected from 533 cases of private placement. As this study makes the nearly one-fourth of the samples are removed in the scope of this study, it is likely to affect the accuracy of this study.2. Since May 2006, the private placement system has been formally introduced into China for nearly six years, during which hundreds of listed companies have been successful placement. However, in this study, there are still several types of private placement cases not matching the filter conditions and not representing the mainstream of the current private placement, which have not been included in the scope.3. From the end of 2007, China ended a short-term stock market rally, and then began to move toward low. This part of the sample is actually special. During this time, because this article doesn’t collect enough data meeting the requirements, the empirical conclusion is not very comprehensive. |
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