Long-run Performance Of Public Traded Companies In China Following Private Placement

Private placement, as a method of refinancing for public traded companies, hasbeen widely used in China since2006and become more and more popular, which hasraised great attention of the academic field. Current research about private placementin China is not systematic and complete and literature about long-term performance inChina is little due to limited sample size and time horizon in previous years. Thisthesis selects BHAR to measure the long-run performance and explores theinfluencing factors. The main findings include:BHAR of public traded companies in China following private placement isgoing up, which performs better than that of SEO.Foreign Institutional Investors’ participation sends a negative signal to themarket.The higher the discount rate, the higher the BHAR of3months or6months,and the lower the BHAR of1year or3years.Market values growth ability, which is positively related to the long-runperformance.This study contributes to the private placement literature from the following twoaspects: one is making up the green field about long-run performance followingprivate placement, the other is conducting a systematic study about the influencingfactors of long-run performance, which will hopefully provide a basis for futureresearch.