Empirical Research On The Performance Of Chinese Seasoned Equity Of Ferings

The performance after seasoned equity offerings has long attracted the attention of scholars abroad. Most of foreign scholars support the "long-term underperformance" effect and have proposed some theoretical explanations. China’s stock market started relatively late. There are two ways of seasoned equity offerings (SEO) including allotment and new stock issue. Allotment started from1992and new stock issue started from1999. With the continuous development of stock market in recent years, the amount of Chinese seasoned equity offerings is larger and larger, exceeding the amount of initial public offerings fist time in2008. As SEO has become an important mean of financing for Chinese listed companies, studying the performance of Chinese seasoned equity offerings has a great significance for optimizing the function of capital market.This paper firstly introduces the research at home and broad, on this basis putting forward the perspective of this study. By analyzing the related theory, this paper proposes five hypotheses. Then this paper selects246listed companies conducting new stock issue between2006and2009, using the revenue on equity (ROE) which is dealt to exclude the industry cycle as the performance indictor. Employing description statistics and multi linear regression methodology, the paper investigates the performance after SEO from five factors (e.g., quality of income, growth, book-to-market ratio etc.).The empirical results show that there isn’t a significant long-term underperformance of seasoned equity offerings after equity division reform. The quality of income has a significantly positive influence on performance. While growth, book-to-market ratio and change of committed investment orientation have a significantly negative influence on performance. The management concentration doesn’t have a significant influence on performance. At last, this paper makes suggestion for investors in investment and state in checking listed companies’applications for seasoned equity offerings.