GEM-listed Companies Private Placement Financing Behavior Research

As an important tool of a listed company’s refinancing, private placement isdifferent from rationed shaves and public offering, private placement is for a fewspecific’s investor, the lower threshold relative to the previous, easy operation is alsocompared with the previous two. In recent years, especially after the completion of theshare reform, private placement has become the first choice of listed company’srefinancing. GEM as China’s "Nasdaq", actor in China’s capital market as "the secondboard market" role, with the motherboard market and the small board together constitutea multi-level capital market in China. GEM listed companies have lower listingthreshold、higher growth、better innovation ability、Smaller scale and higher risk. Thesecharacteristics determine private placement of the GEM listed companies is differentmotherboards and small plates. This is the focus of this thesis.Domestic and foreign scholars on the the private placement mainly from threeaspects: why a companies choose the private placement, the declaration of effectivenessof the private placement and the discount rate; The stock’s long-term performance afterthe private placement, became to Hedegaard, Smith asymmetric information theory andWruck oversight effect theory study represented the two main theories privateplacement. As there are only six companies listed on GEM re-financing through privateplacement, the study sample data is limited. In this paper, event analysis methods anddescriptive statistics is used for analyzing companies listed on GEM’s discount rate andthe private placement announcement effect. Then selecting the process in the privateplacement represents a typical case LandOcean to depth analysis, explore the privateplacement issues of GEM-listed companies. Finally, based above all,giving policyrecommendations.This article includes the following sections:The first chapter is an introduction, mainly on the research background, methods,and so do a brief introduction; The second chapter introduces domestic and foreignscholars on the private placement and the private placement of flow-related policies;Chapter III studies discount rate and the private placement announcement effects of thecompanies listed on GEM through the event descriptive statistics method. Chapter IVon the basis of the previous research on the company is typical of the private placement LandOcean thematic studies. The last chapter summarizes the conclusions of this study,give propose policy recommendations.The first chapter is the introduction, this paper introduces the research backgroundand methods. Companies listed on GEM listing threshold is low, the higher thecompany’s growth, innovation ability, greater risk of small-scale enterprises and othercharacteristics of the decision in the analysis of companies listed on GEM finance,investment, management and other acts of the time to distinguish on the Main Boardand small board of listed companies.So, the GEM private placement is different fromthe motherboard and small plates. How about GEM companies private placementdiscount rate, declaring effects and long-term performance? What factors will affect theGEM companies private placement market performance? These factors are the samewith the motherboard market? Placement during the existence of the phenomenonagainst small investors do? This paper will study these issues in depth; Because of thelimited sample data, this paper uses empirical research and case studies on acombination to companies listed on GEM private placement conducted in-depthresearch.The second chapter is to introduce domestic and foreign scholars for research andprivate placement placement processes, related policies. Among them, Hedegaard,Smith asymmetric information theory and Wruck oversight effect theory is the mostimportant theories. Besides them, Sheehan, Barclay and Holderness study found highpremium comes from the private placement investors to participate in additionalsupervision of listed companies compensation, investors involved in private placementis an important duty of supervision of participating companies, didn’t like to getinvolved in large transactions proprietary additional profits, so they should be given ahigher to compensate. This also explains why the specific placement is usually adiscount rate. Typically, different markets with different discount rate. For example,through research, China Hong Kong, the average discount of private placement of5.75%, the U.S. was higher, reaching20%. Marciukaityte, Szewczyk and Varmathrough the U.S. capital markets1979-1996to conduct a study of private placement,found before placement performed better (than the average market yield) of SEOsshortly after the declaration has a higher positive effect, while the long-term share priceperformance is poor. In addition, Wu Yao, Lee and Yeo, Deng Lu, who according to theprevious theory, for other countries, including China’s capital market, private placement conducted a study to draw relevant conclusions. In this paper, on the basis of theseconclusions, on the Growth Enterprise Market of the private placement conduct specialstudies.Chapter III studies and through the event descriptive statistics method, thecompanies listed on GEM, discount rate and the private placement announcementeffects were studied. GEM-listed companies private placement market, the averagediscount was5.19%, well below the general level of32%of listed companies.GEM-listed companies during the CAR window placement was significantly differentfrom zero, mean0.031023, there is a positive effect of the declaration of companieslisted on GEM and the declaration of the private placement market effects than theoverall level.Chapter IV on the basis of the previous research on the company is typical of theprivate placement LandOcean thematic studies. LandOcean injected new competitionthis asset is not high quality assets, there is a high valuation. Major shareholder throughprivate placement purchase inferior high premium assets, damage the interests ofminority shareholders, while ensuring high valuations but major shareholders equitywill not be excessive dilution.Chapter V is the conclusions of this study, policy recommendations and limitations.Through the analysis of the previous chapters, gives companies listed on GEM discountrate, declaring effects, information disclosure and other aspects of the private placementtypes conclusions and policy recommendations are given.Finally, the limitations of insufficient sample data, but as more and morecompanies listed on GEM is implemented through a private placement to refinance theprivate placement on the GEM research will increase with the sample data anddeepening, more valuable conclusions can be drawn.