The Research On Private Placement Under The Control Of Large Shareholders And Long-run Performance

Since the promulgation of the "management approach of securities issuance forlisted companies”，the private placement has become the most popular option ofre-financing for listed companies. Although it seems that the private placement is thevoluntary choice between listed companies and the participants. There are manyoperating space for big shareholders’ tunneling, such as the low barrier to issue,hazy definition of date pricing benchmarks and ten percent discount of offer price.The probelem whthere big shareholders use the private placement for tunneling or notalso becomes the focus of research. This paper aims to solve this probelem.Previous studies explored the big shareholders’ tunneling often from theshort-term angle, which is still a controversy. This paper explored the tunneling fromthe long-term angle, which not only has the innovation also has a stronger persuasive,and the study is of great importance in many aspects, such as standardizing operativeprocedures of private placement, protecting the interest of minorities shareholders，and promoting the capital market to become more faire and justice.We started with the Principal-agent theory and Asymmetric Information theoryto analyses the motivation and condition of tunneling behavior for big shareholders.Then based on the tunneling effect, we summarized the main way that the bigshareholders transfer the benefits from the listed companies. Based on the previoustheoretical analysis, we put forward some hypotheses. Then through the descriptivestatistics analysis, single factor analysis, nonparametric test and regression analysisand other empirical methods, we tested the relationship between the long-runperformances and the object of issue. This study showed that：(1) when the bigshareholders participated in the offering，there is a negative and significant effect onthe long-run performance which is included the long-run stock-price performance andthe long-run operating performance. This result implied that, in the course of offering，the big shareholders maybe transform the wealth from the listed companies tothemselves, which lead to driving down the long-run abnormal returns;(2) weexamined the relationship between the long-run stock-price performance and theinterest separation level between the big shareholders and minor shareholders. Theresult showed that the long-run performance are also significantly negative for theinterest separation level, which is the bigger the separation level, the worse the long-run abnormal returns are. This evidence suggests that the private equityplacement maybe a tool for the tunneling of large shareholders.