The Empirical Study On Private Placements And Corporate Performance In Chinese Listed Companies

As equity division reform successfully accomplished, and since the China securities regulatory commission promulgated and implemented the "Administrative Measures for Listed Companies Stock Issuance" in2006, which has stipulated private placement in explicit terms for the first time, private placement has enjoyed a great boom.Private placement has many advantages over public offering and rights offering, such as few limited conditions for offering, efficient approval procedure, low cost and short issuing period, etc. Besides, it can not only raise capital for investment in projects and corporate’s daily operations, but also is helpful for corporate to list in integrity and introduce strategic investors. So private placement has gradually become the major way of SEO.But since private offering has flourished for just a short period of time on China’s security market, relevant laws and regulations are not perfect yet. With its own characteristics, relevant studies on foreign security markets cannot been fully applied to China’s security market. Domestic research on private placements mainly focuses on the announcement effects, discount and the benefits transfer. The few empirical study which focuses on the influence on short-and long-term performance, mainly centers on the split-share reform period, and corporate’s overall performance. Since the private placements behavior has become more mature and rational, it’s of great practical value to study the relationship between private placements and corporate performance during recent years, and the effects of the characteristics of private placements, including private placement objects, pricing methods and exchange methods on the corporate performance.So this paper selects private placements from2009to2010as a sample, uses relevant financial data from2008to2012, to study the effects of the characteristics of private placements, including private placement objects(differentiate between major shareholders and institutional investors, strategic investors and financial investors), pricing methods and exchange methods on the corporate performance afterwards. Results show that,1) the overall short-term performance has improved significantly, while the medium-and long-term performance drops remarkably;2) the participation of major shareholders is positively related to the corporate’s performance;3) the introduction of strategic investors is not notably related to the corporate’s performance;4) the discount rate has evidently positive relation with the performance;5) the companies which have been invested with non-cash assets have observably better performance than the ones been invested by cash. Analysing these results, this paper further puts forward relevant explanation and political suggestions.