Empirical Study On Announcement Effect Of The Directional Add-issuance Of China’s Listed Companies

The directional add-issuance, in foreign capital markets, has existed and the developed for many years. It’s often called the private placement in foreign securities market and it is widely used by listed company in foreign developed securities’market to secondarily financing. And in our country before2006, it was still a new concept and not widely promoted. Only a few listed companies which have got a special approval was qualified for using the directional add-issuance to finance.In2006, as the administration method of non-public issuance came out.It was the first time that the security administration made clear definition and specification of the directional add-issuance, so that provide the legal basis for the development of the directional add-issuance. And more and more Chinese listed companies use this new financing method. Then during2006to2007, the rapid development stage of China, It has gradually become the most important refinancing method of the listed companies in our country. Because the advantages of directional add-issuance compared to public issuance, such as the threshold of raising money is low, and the supervision is relatively loose and so on, which all promote the rapid development of the directional add-issuance.The directional add-issuance is refinancing from the big shareholders, strategic investors and other institutional investors.So no matter what the objects are, they are all delivering the messages of the financing ability to the market, particularly refinancing from the big shareholders. Because the big shareholders is often close to the company’s management and business, and also have more information. As the result big shareholders that get the directional shares of the listed company’s shares increased the investors’ confidence of the listed companies, and make directional add-issuance become good news of the company.With the announcement of directional add-issuancei, it often releases information of the listed company to the market. When the information is received, it affects the market. The excess profits of the share with the directional add-assurance announcement changes, during the days before and after the announcement day, a certain degree of extra fluctuation and change happen. At the same time, before the announcement of directional add-issuance, as inside information usually caused the extra income and fluctuations of stock price, so the study of the directional add-issuance announcement effects is meaningful and necessary. Through the studying of the further understanding of how the directional add-issuance influence the market, and validating the effectiveness, we can make the supervision of market more practical. And at the same time that can help investors avoid the risk that the directional add-issuance bring to the market. At the same time it can also help us to know how to safeguard the interests of the shareholders and promote the healthy development of the listed company.At first, the paper make some studying and understanding about some related connotation and the development of the directional add-issuance of china security market. That the method of directional add-issuance are widely used by listed companies is inevitable, because the difference to the public issuance and the advantage of the directional add-issuance.Based on the research before, I make the analysis on the industry.I choose6industries, which can be the best representatives. And use this sample to make empirical researches to test and verify if there is the effect of announcement in different industries. And I got the conclusion that there is much difference between each industry. Food, real estate, auto and transport industry show more apparent announcement effects and the pharmaceutical and public undertakings industry do not show clear announcement effects. And then in order to verify directional secondary announcement effects by the influence of the object oriented, I classify the aggregate samples of all6industries, according to whether refinancing from the big shareholders, into two types And I finally come to conclusion that the directional add-issuance which is refinancing from big shareholders has more apparent effect. When big shareholders are willing to participate in directional shares, the investors will be more confident in such company’s future development and the value of the company will rise. According to the theoretical analysis of the above, at last I select some important factors to analyze how they affect the effect of announcement.