The Research On Impact On The Profit Of Medium And Small Investor By China’s Private Placement

The private placement has become the main channel of refinancing for the publicly-traded companies since the beginning of the non-tradable shares reform.Due to the immaturity of the security market in our country, the investment of the small and medium investors lost the initiative in the private placement.In this paper, we mainly talks about the private placement’s influence on the small and medium investors.Current researches focuses on the short-term effects of the adding,especially the event study in the announcement day and the discount rate.These researches usually use small samples.We analyzed the current situation of the directional add-insurance in terms of institution,process,development and comparison with other financing channels.In addition, using the data from the companies’financial statements,we also did a factor analysis for the return change during the affecting period.We chose the data of the public-traded company that had the private placement from June2006to September2012to be our sample and built a multi-factor regression model.With these data, we analyzed the short-term,mid-term and long-term rates of return and found the significant factors in different periods of the directional adding.We found that the private placement has just a minor effect on the short-term rate of return,while the operation condition and profitability have significant influences on the mid and long term.This phenomenon becomes even more significant when it is far from the announcement day.In addition,we found that the companies that have the private placement have higher rate of return than the market average in different length period.The difference is most significant in the mid-term.Also,the rate of return has a clear variation over different industries,among which finance industry,electronic manufacturing industry,light industry and general-field industry have higher rates than the rest.In addition,the insider trading also has a certain influence on the publicly-traded companies’stock returns.Before the announcement day,the insider tradings embezzlement the returns after the private placement announcement day in a certain extent.