The Wealth Effect Of Long-term Shareholders Of Listed Companies Private Placement

Since May8,2006SFC released the listed companies Securities Issuance，China’scapital market has more than800companies using private placement deadline to June30,2012, the stock market setting off a wave of private placement upsurge. At this point,private placement has become an important way of equity refinancing for listedcompanies in China. However, because of the different sample and research methods,the long-term market performance of private placement has been an issue of disputes,and scholars have different views. The previous studies focus on the short term ofplacement market reaction, few study the long-term market reaction and marketperformance in the period of lockup expiration of the private placement stock.In this paper, select the implementation of the private placement of293listedcompanies from May28,2006to June30,2009in China market as a sample, usedescriptive statistical analysis and event study methodology, analyses the long-termshareholder wealth effect of private placement and shareholder wealth effect in theperiod of lockup expiration. We find that:(1)shareholders get positive abnormal returnsin the long-run for companies of private placement, explain that private placement ishelpful to the development of listed companies in the long term;(2)the long-termshareholders wealth effect of the private placement of new shares issued to theassociated shareholders is better than non-associated shareholders. Major shareholdersand the associated shareholders participating in the private placement, is conducive tothe improvement of corporate governance, reduce the agency costs of operators;(3)Large shareholders to subscribe for the private placement of shares by non-cashlong-term shareholder wealth effect is better than the major shareholders to subscribe incash, the largest shareholder through a private placement of listed companies into assetsmore conducive to enhance the development of its performance, and the listing of thecompany’s future stock price rise;(4) the shareholders wealth effect to it lockups isnegative, support the price pressure hypothesis, that submitted a large number of sellorders near lockup expiration, forcing prices down.The structure of this article can be divided into five parts, Chapter1describes theresearch background、the research dynamic at home and abroad, and research ideas.Chapter2introduced development status quo of private placement for China’s listedcompanies from the four aspects of the development process, release characteristics,other floatation comparison, and mode of operation. Chapter3is a theoretical analysis, describing agency theory, asymmetric information theory, signal theory and the measureof shareholder wealth effect. Chapter4is the empirical analysis, present basicassumptions, select declared private placement of293listed companies as samples, usecumulative abnormal return (CAR) for empirical analysis of and explain the empiricalresults of the study. Chapter5is a summary of the full text, including the conclusionsand policy recommendations.