The Empirical Research On The Relationship Between Major Shareholders In Private Placement And The Long-Term Performance Of Listed Companies

The share structure split reform of listed companies in China, means that a full circulation environment is coming, more and more financing methods may be chosen by listed companies, but a new way of refinancing with the advantage of low requirements, easy to operate and low cost replacing Allotment, Issuance of new shares, and other methods of refinancing, rapidly became the preferred mean of refinancing to China listed companies. However, private placement lead to the issues of redistribution of wealth between the new shareholders and the old shareholders in practice, which would stimulate the major shareholders to transfer wealth, thus infringed the interests of minority shareholders. Meanwhile, the major shareholders may also inject low-quality assets into listed company in private placemen, hindering the development of listed companies.As private placement has just been happening in recent years, there are not many researches on it by domestic scholars. After reviewing the literature, we discover that the studies on private placement mainly focus on the pricing, the motivation, the announcement effects, short-term market reaction and the wealth transfer of major shareholder etc. There are few empirical researches on the operating performance of listed companies with private placement, and most of the domestic literature study on the change of performance of listed companies only one year after the year of implementation private placement. In this paper, we use66China A-share listed companies which have implemented private placement in2007as the study sample, and use the factor analysis method, select the net profit margin, return on equity, current ratio, quick-frozen ratio, debt-asset ratio, cash flow debt, liquidity asset turnover, total asset turnover, net asset growth, total assets growth rate, in all10financial indexes,which can reflect listed companies’profitability, operating ability, debt paying ability and growth ability to establish a financial index system in order to form a comprehensive performance scores calculation of2006and2010, comparing the rank of the performance scores. To verify the factors affecting the listed companies’ long-term performance with major shareholder in private placement, this paper, further researches whether the institutional investors, the type of assets-injecting in private placement, and "wealth transfer" will be impacted on the listed companies’long-term performance? Empirical results show that major shareholders, controlling shareholders and related parties involved in private placement, long-term performance of listed companies not only has not been improved but has been worse; and long-term performance of companies which are injected into non-cash by major shareholders in private placement is superior to the companies’performance of cash-injecting; both major shareholders and institutional investors involved in private placement, the listed companies’performance displays a deteriorative phenomenon after accomplishing, and only major shareholders, controlling shareholders and related parties involved in private placement, the performance of listed companies is still worse than the past year’s before implement private placement, but it shows a gradual better trend of improvement in business performance; Finally, whether major shareholders are tunneling or propping the listed companies or not, the companies’ long-term performance are displayed in drop, that is, There was no significant difference. From the empirical results, the financing method of private placement has not improve the long-term performance of listed companies.This paper includes the following sections:the first chapter is the introduction, mainly outlining the background of research, defining the relevant concepts and research purposes, ideas, etc; the second chapter describes literature review; The third chapter introduces the historical evolution process about refinancing in China’s capital market, distinguishes three refinancing methods respectively, and describes the implementation process of private placement, the pattern of private issue, and the advantage of refinancing. The forth Chapter is the empirical study; the fifth chapter shows the results of empirical research and analysis; the sixth Chapter is the conclusions and several policy recommendations.