Research On The Mechanism Of The Effects Of Investor Sentiment On Equity Offerings Decision

Investors are the main subject of the company’s external environment, the company’s decision of SEO is difficult to avoid the influences from investors. Investor sentiment is characterized as a measurable variable of investors in this paper. My study chooses the A-share listed firms that issue public or private placements during 2007-2014 as samples. I first study the influences of the investors sentiment on the types of the company issuing,and further study the influences of the investors sentiment on the behavior of the specific company offerings(issuing size, purchase way). Finally, I study the differences of announcement effects between public offerings and private placements and reasons from investor sentiment.Research results show that the major shareholders have the motivation of grabing private interests. In issuing decisions: with the upsurge of investor sentiment, companies will tend to choose public offerings and larger issuing size of public offerings to transfer the risk of overvalued share price or implement ‘expropriation based on dualistic ownership structure’;with the decline of investor sentiment, companies tend to choose private placements and larger issuing size of private placements to minimize the control power dilution and maximize revenues from growing value; and when the major shareholders participate in the private placements, they tend to purchase new shares by asset injection to reduce the risk caused by investor sentiment. Finally in the capital markets: the announcement effects of private placements is better than public offerings when the investor sentiment is high, but there is no significant difference when the investor sentiment is low.