Equity Financing Investment Income Analysis And Improvement Suggestions

After share issuing system was reformed in2006, significant changes haveoccurred to our public companies’ investing and financing environment, which willhave what kind of effect on the benefits of the investors who have invested SecondEquity Offering(SEO) public companies? This paper, by event study, has calculatedand analyzed the cumulative abnormal return(CAR)of different investors in short,medium and long term and found that: In the long term, no matter in what kind ofway investors invest in companies enlisted by SEO, they all can obtain positive CAR;In the short term, the CAR of investing in companies listed by additional listing isabove zero, while it is below zero for investing in companies listed by rationingshares.Investors who are involved in SEO invest the SEO companies by buying theshares issued by the SEO public company. In the long term, the CAR obtained byinvestors of buying directional issued additional shares of the public companies isgreater than that of buying the additional issued shares of the public companies and ofthe investors who has purchased directional issued additional shares of the publiccompanies, the CAR obtained by related shareholders is greater than that of theinvesting organizations, and the CAR obtained by investors buying publicly issuedadditional shares of public companies is greater than that of buying allotted shares.Investors not involved in SEO invest SEO public companies by the way ofbuying the shares of companies which are enlisted by equity financing in thesecondary market. In the long term, the CAR obtained by investors in a high-to-loworder is buying and holding the tradable shares of the companies enlisted by publicadditional listing, directional additional listing and allotting shares. In the short term,the CAR of the investors of buying the shares of companies enlisted by publicadditional listing is the highest and the CAR of buying the shares of companiesenlisted by directional additional listing is higher than that of companies enlisted by allotting shares.Based on the conclusions of event study, this paper has analyzed the problems ofSEO issuing system in the view of investors and brought up suggestions improvingSEO issuing system in the aspects of improving price-setting system, informationdisclosing system, trading system of issued shares and so on.