An Empirical Study On The Impact Of Direct Equity Investment On IPO Financing Efficiency Of Listed Companies

The direct investment business of securities was approved in2007. Direct investment developed rapidly since2009because of the setup of GEM. To march,2013, there are totally103companies invested by securities, among which82companies have successfully listed. Extremely high yield, immature development model and the possibility of conflict of interest make direct investment a controversial business of securities.Overseas research indicate that there exist mainly two effects caused by direct investment of securities:one is the certification effect or adverse selection/grandstanding effect which means that securities can act as a certification body and delivery positive information about the companies to the IPO market and investors; another is the conflict of interest effect which means the securities may hurt the interest of waiting listed companies for sake of their own interest.By studying from year2009to March1,2013all listed companies in Chinese stock market, adding up investment projects a total of103, found the companies invested buy the wholly-owned company of securities are tend to choose the holding-share securities as the underwriter, that is, the package model". And the actual processes of most direct investment are as follows:the security company become underwriter of the invested companies first, and then obtained shares building on the relationship with the preparing listed companies. The results of the empirical part of this paper show that the company under the "package model" have a better IPO process:higher P/E ratio, lower underpricing rate, larger issue amount and lower fee. The result verify the verify effect hypothesis overall.