The Way Of Asset Injection, Asset Evaluation Increment Rate, Performance Of Firms Large Shareholders Involved In

The Administrative Measures for Listed companies Stock Issuance was promulgated andimplemented on May2006, which has not only laid a legal foundation for the use of the privateplacement in China capital market, but also made private placement become one of the mostimportant way for China’s listed companies to raise funds. From2006to2008, there are more than300listed companies which raised funds by private placement, accounting for about15%of the totalnumber of listed companies in China. At the same time, the academic researches about privateplacement are getting more and more popular, the researching point of scholars basically focused onthe short-term announcement effect of the private placement, the long-term price effect, thedetermination of the issuing price and large shareholders occupying other shareholders’ interests etc.,and conclusion is controversial. So we are trying to find a new perspective to research privateplacement event on basis of existing research literatures.In this paper, we select listed companies successfully implementing the private placementduring the period from2006to2008as samples. All samples are divided into two types based on thedifference of injecting assets, cash injecting and assets injecting. We comparatively analyze theshort-term announcement effect of two types and its impact on short-term performance of thecompany, the long-term market reaction and its impact on the company’s long-term performance.Furthermore, the samples of assets injecting are subdevided into two groups in accordance with theasset evaluation increment rate, then we comparatively research their market reaction andperformance. The results show that short-term announcement effect of cash injecting is better thanassets injecting’s, but the short-term performance of cash injecting is worse than assets injecting’sbecause of the large shareholder occupying too much injecting funds. Secondly, the long-termmarket reaction of cash injecting is better than assets injecting’s, but the long-term performance ofcash injecting is worse than assets injecting’s due to more and more funds being occupied by largeshareholder of listed company. Thirdly, the higher asset evaluation increment rate is, the worse theperformance is, and investors act accordingly.