The Research On The Effect Of Medium And Small Shareholders Around Private Placement Of Listed Companies

With the rapid development of China’s capital markets, equity refinancingof listed companies demand increasing in recent years, private placement iswidely welcomed to achieve the purpose of financing by more and more listedcompanies in recent tow years. A total of177listed companies completedprivate placement and raise about360billion yuan in2011. Compared to thecorporate bond, public offering, allotment of shares and other equity refinancing,private placement has gradually become the financing choice for China’s listedcompanies. Although the regulators on refinancing of listed companies are verystrict, but at present china’s capital market is not mature, the law can not protectall the interests of medium and small shareholders, so that private placementshould pay greater attention to the interests of medium and small shareholdersthat are affected.Listed companies hope that private placement can enhance the profitabilityof listed companies and improve corporate governance. However, Duringprivate placement，there may exist infringement on the interests of medium andsmall shareholders. The major shareholders can reduce of the original tradable shares to manipulate the stock price, or not inject high quality assets, evenmanipulate of profit distribution and dividends to achieve the tunneling.Therefore, a study on the influence the interests of medium and smallshareholders has a certain practical value and realistic significance.First, this paper introduces the private placement process, characteristicsand research status at home and abroad, then use the model to analyze theprivate placement to different shareholder wealth effect. Second, according toEPS or ROA changes of the listed companies before and after private placement,use paired sample T test to verify the private placement to long-termperformance. Third, on the analysis of listed company’s private placement on theinterests of small shareholders based on the influence factor, select147successful implementation of private placements as research samples, from2006to2010all samples are continuous and complete financial statements, usemultivariate regression linear regression method, analyze private placement oflisted companies on the interests of medium and small shareholders influencefactors. Results: from the long-term interests of medium and small shareholders,shareholders of injection of assets are not necessarily high quality assets. In the year of the implementation of private placement, the size of dividends haspositive correlation and significant effect on the interests of medium and smallshareholders. Major shareholders’ reduction of the original tradable shares hasnegative correlation and significant effect on the interests of medium and smallshareholders. Independent directors have no significant effect on the interests ofmedium and small shareholders. Manufacturing industry infringe the interests ofmedium and small shareholders obviously than the non-manufacturing industry.Finally, from the internal corporate governance and external related system, putforward to protect the interests of small shareholders proposal. Hope that thispaper can provide useful reference for the market regulation.