Market Reaction And Its Influencing Factors Of Private Offerings Announcement

After the measures for the administration of securities issuance of listed companies issued by the China securities regulatory commission (CSRC) in 2006 and marked detailed regulations for private offering, private offering gradually become the main form of equity refinancing of listed companies, since it has low barriers to entry, cycle short to release and other properties. The number of listed companies raising money by private offering and the quantity of raised money are of dramatic growth (annual growth rate at about 100%; the number of listed companies and the money raised have risen from 281 and 334.2 billion Yuan in 2013 to 856 and 1.3493 trillion Yuan in 2015; the money raised by private offering accounts for more than 85%of equity financing) in China’s A-share market since 2013. Private offering has become the most important way for equity financing of China’s listed companies, and is of great significance for investors and regulatory authorities.Some scholars had done the analysis and research of private offerings announcement effect and its influencing factors before. However, at that time, the importance of the private offering of listed companies in the securities market could not compare with nowadays, the market activity was low, and there were less data samples.In this paper, we collected 656 data of private offering plan announcement issued from January 1,2013 to December 31,2015 and made empirical analysis for private offering announcement effect and its influencing factors. By using event study method, this paper found that the private offering has significant positive announcement effect. By choosing appropriate explanation variables and establishing multiple regression model, this paper found that the company scale and the cumulative average abnormal returns have significant negative correlation, and circulating shares’share and their relative issuance scale have significantly positively effects on supernormal yields. Meanwhile, by studying the relative issuance scale’s impact on the announcement effect in the form of semi-parametric regression, this paper found that the degree of positive correlation between relative issuance scale and supernormal yield has larger fluctuation with different scale of issuing.