Research On The Impact Of The Different Objects Of Private Placement On Listed Companies’ Performance

The paper is divided into six chapters as follows:Chapterl IntroductionThis chapter talked about the background and significance of this study; followed by research thoughts, framework and research methods. This chapter conducted the theoretical analysis and empirical research from the following four aspects:first, the short-term performance of the enterprises which has a private placement; Second, how do different objects of the private placement affect the short-term performance; Third, the long-term performance of the enterprises which has a private placement; fourth, how do different objects of the private placement affect the long-term performance. The framework represented it with a graph to make the research thought clear and understandable. This paper combined normative research and empirical research together and event study is the main method of the empirical research.Chapter2Literature ReviewThis chapter is divided into two parts of the foreign literature review and domestic literature review. In these two parts, research on the private placement short-term effect and long-term effect was reviewed, as well as the research on different objects of the private placement. This chapter concluded with a comparative analysis of the domestic and foreign literature.Chapter3The situation of private placement and the institutional backgroundThis chapter focuses on two aspects of the situation of the private placement and institutional background. The first part compared the private placement with public insurance and placement, followed the reason of the private placement. The last part expounded the related rules of SECURITIES LAW OF THE PEOPLE’S REPUBLIC OF CHINA and other laws and regulations.Chapter4Theoretical analysis All relevant concepts involved in this research were defined, mainly based on the private placement definitions, the private placement objects definitions, the controlling shareholder and related parties definitions and the short-term results and long-term effects definitions; followed by the theoretical basis including the optimal capital structure hypothesis, monitoring hypothesis, the hypothesis of asymmetric information and price pressure hypothesis; finally, the short-term effects, the long-term effects and the relationship between private objects and price effects were analyzed and discussed.Chapter5Assumptions and study designBased on the theoretical analysis, this chapter established four hypotheses, then explained the source of the data and how the samples were chosen, and then defined all the related variables and predicted their symbols, finally established two models to empirical research.Chapter6Empirical results and analysisEvent study was used in this research which defined the board resolution announcement date as the event date and defined (-15,+5) as the short-term time window as well as defining [0,36] as the long-term time window. This chapter conducted the t test, descriptive statistical analysis and the multiple regression analysis to justify the four hypotheses and revealing the effect of the private placement objects on the performance of listed companies.Chapter7Conclusions and Policy RecommendationsFour conclusions were drawn as follows:(1) The short-term impact of private placement is positive;(2) When the private placement objects includes the controlling shareholder and related parties, the short-term impact will be better;(3) The long-term impact of private placement is negative;(4) When the private placement objects includes the controlling shareholder and related parties, the long-term impact will be better.Then, this article offers some advice to the securities management agencies, the enterprises aiming to financing as well as small investors facing the private placement events.The main contribution of this article(1) Innovative research view aspects Most of the existing literatures focus on the short-term impact of private placement; the long-term and private placement objects research is much less. This paper took the point of view of the different impact on short-term and long-term results of the different objects, which enriched the existing literature.(2) New conclusionsMost of the existing literatures have conducted the conclusion that the short-term impact of private placement is positive; some literatures pointed out that the long-term impact of private placement is also positive and few literature pointed out how different objects impact the long-term price. This article concluded that the long-term impact of private placement is negative and when the private placement objects includes the controlling shareholder and related parties, the long-term impact will be better. This is a new conclusion different from existing literatures.(3) Brought in new theoretical explanationMost of the domestic existing literature are based on the theory of monitoring hypothesis, the hypothesis of asymmetric information and so on, this article brought in new theoretical explanation as the coordination hypotheses which increased the diversity of domestic private placement theory.The limitations of this article(1) The choice of control variables. CAR was affected by a variety of factors, including the size of the company, financial leverage and so on. This article chose some control variables based on existing literatures and theoretical analysis itself. The R2of model2is lower than model1which means it’s not perfectly fit to the reality and need to be improved.(2) Sample limitation. From June30,2006to June30,2009, there are324samples which have successfully conducted the private placement. Model1finally used229samples and model used201of them. It has some statistical significance, while when the samples were divided into two parts, each part is much smaller, so further division cannot be done. This is also a pity of this paper. Over time as well as the further development of the private placement, more data will be obtained and the empirical research will lead to more convincing results. Future research trend of this study(1) When sufficient data is available, the objects of the private placement of listed companies can be further subdivided considering elements as industries and so on, more classification criteria will be adopted and there will be further transverse subdivision.(2) Extending longitudinally of the study of the impact on the performance of the private placement objects to unlock after a certain period in order to explore how the laws and regulations limit the performance of the private placement, and to explore how the changes of performance before and after the unlock time point and find the reasons.