Rights Of Listed Companies Financing And Financial Performance Change Research

Financing which comprise the prerequisite of an enterprise’s survival, development and profitability is of crucial importance for any enterprise. There are two ways for enterprise to raise money:debt financing and equity financing. The writer’s study object is seasoned equity offering, because it is the oldest way of equity financing and the amounts of funds which raise compose a large portion of the total funds a company get. Therefore, the rise and fall of secondary equity offering can provide reference for the study of equity financing and China’s stock market. The writer focuses on the enterprise’s long-term performance, not the short-term performance, because the short-term performance is measured by the change of the listed company’s share price around the publication of announcement. In China, the stock market is not well developed, the inverters is not rational enough. Furthermore, the share price is also influenced by the overall performance of the stock market. Therefore,the change of share price is not an ideal measurement of the enterprise’s performance.As for the issue of performance of SEO company, no absolute conclusion can be derived. Some study demonstrate that SEO has no effect on the company’s performance, while others believe that company’s performance will deteriorate. The related experiment include: Xiongzhengde, Lishengnan(2009) observe the fluctuation of ROE and the growth of business profit rate. Xiongzhengde’s experiment has the flaw of short observation period which last only two years after the SEO. In the case of construction investment, the project’s revenue can’t be get until several years later. Thus, in the first several years, there are no cash outflows and profit. Huangshaoan’s experiment statistics the change of ROE in six to seven years after the SEO. But Huang’s experiment omits the comparison of the post-issue performance and the pre-issue performance, as well as the Sig test.This paper observes the long financial performance of the companies which undertake SEO. The statistics conclusion is that the company’s performance deteriorate after SEO. Furthermore, the writer design an experiment to measure whether the occurrence of SEO is a substantial factor in the performance of a company which issue SEO. Also, in the process of devising the model, the writer includes the company’s asset size, the funds size which is raised in the SEO and the company’s cash flow as the factors to be settled down. The experiment’s conclusion is in accordance with the assumption which is put forward in the first place, based on the related theory. Many scholar pointed out that the binary ownership structure in China is the fundamental reason for the poor post-issue performance. Before the split share structure reform, many articles pointed out the reform could improve the SEO performance, but, after the reform, there are limited research on this issue. Heqi(2007) study the market reaction. Wuxue(2010) study the performance around the SEO. which conclusion is no matter whether the reform was taken, the company’s performance deteriorate after SEO.The writer compare the enterprises’ financial performance before the split share structure reform and the enterprises’ financial performance after the split share structure reform. The findings are:the post-issue performance after the split share structure reform is better than the post-issue performance before the split share structure reform; the financial performance is more stable after the reform; the reform play an positive role in improving the enterprise’ post-issue performance. Furthermore,the writer investigates whether the split share structure can be a possible factor that influence the enterprise’post-issue performance through empirical research. The ratio--none-circulating equity/all equity--which stand for the binary ownership structure is not an important variable in the model. The possible reasons may be:the state-owned company has the tendency to smooth profit: the state-owned company can get subscription from the government; the ratio is unimportant in the case of none-circulating shareholder dominating the company; the company’s total asset is composed of many factors and not sensitive to none-circulating equity/all equity ratio.