Study On The Choice Of Equity Private Placement Of Listed Companies In China

With the development of capital markets, listed companies need refinancing in more diverse way. From allotment to seasoned offering, private placement will be adopted as more as possible. Especially in2006, the success of share-trading reform promoted the rejuvenation of securities market, so as to create favorable condition for private placement. Among so many options of equity refinancing, why the listed companies select the private placement and how to choose the offering targets are worth exploring in financial area. Based on the mutual foreign theory and Chinese actual background, this paper study the factors which affect the reason why companies choose private placement.This paper takes799listed companies in A-stock from2006to2011as samples which announced the decision of refinance events, estimates a Logistic regression model which focuses on controlling and asymmetry information to analyze the factors that affect the choice between private placement and public offering. The result indicates that control consideration is the main factor that affect the choice. The more centralized control over the enterprise, the more inclining to select public offering. Highly centralized companies avoid issue methods that dilute control benefits or subject them to more monitoring, especially when the biggest shareholder’s control margin is small. Besides, the information hypothesis can partly explain the refinancing choice,which states that undervalued firms with favorable prospects and smaller size and little financial slack choose the private placement method to resolve the information asymmetry problem when seeking external equity capital. For two sub-samples, control consideration affects the non-state companies choosing private placement significantly, however it has a smaller effect on state-company samples.