A Study On Influence Of Private Placement On China’s Listing Corporation Long-term Stock Price

In recent years, the private placement financing in China’s listing Corporation hasthe larger proportion. But because of the short time of private placement in China, it hasa big limitation to obtain the sample data. At the same time, the research about theinfluence of private placement on listing Corporation’s long-term stock price isrelatively small. Then, whether private placement will have a positive impact on thelisting Corporation’s long-term stock price? Whether the long-term stock price orientedcontaining large shareholders and the shareholders to participate in the offering price isbetter than the long-term stock only containing the non associated shareholders toparticipate in the directional issuance price performance? Whether the long-term marketreaction to the non cash assets of additional directional subscription is better than thesubscription to cash assets of placement? In this paper, on the basis of previous studies,we will give a further exploration of these three problems, provide some reference inregulation and policy for our country private placement formulation. This is also thispaper’s purpose and meaning.Firstly, we give a brief description of the basic situation of China’s privateplacement on the development process from the orientation of additional laws, thecharacteristics, modes of operation and the problem of the present stage, paving the wayfor the next research of the relationship between private placement and long-term stockprice.The paper first theoretically analyzes the relationship between private placementand long-term stock price:1) the listing Corporation internal investors and institutionalinvestors with its own information superiority, transfer the signal of better developmentof the company to outside investors when subscribe additional shares, and directedadditional shares have longer lock-up period which strengthen the supervision of thecompany, reduce the agency costs between shareholders and managers, have a positiveimpact on the long-term performance of the company, to stimulate the two secondarymarket to buy stock and hold for a long time. Therefore derive that private placementhas a positive effect on the listing Corporation;2) the large shareholders has moreinformation advantage than non associated shareholders, and the subscription of theshares has longer lock period, the the willingness and ability of supervising company managers is also stronger, so the big shareholders to participate in additional orientationcan transfer more favorable signal. Therefore, we deduced that the long-term stock withaligned large shareholders to participate in the issuance will have better long-term stockprice performance than only with directional non shareholders to participate in theoffering price;3) by injecting non cash assets to subscribe directional issuance of sharescan reduce the probability of listing Corporation’s connected transactions andcompetition, and also achieve economies of scale and scope economy through theintegration of resources, reduce transaction costs, increase big shareholders’ holdingproportion. It can also reduce the chance of "tunneling", spur the injection ofhigh-quality assets, promote the long-term value of the company. Therefore, wededuced that the long-term market reaction to the directional directional subscription ofnon cash assets is better than purchase with cash assets.After deriving out the above conclusion according to the related theories andliterature, this paper makes an empirical analysis to verify that whether the conclusion issuitable for China’s listing Corporation. This paper collected the Sample Firms’ relevantfinancial and stock price data from2006to2010, give descriptive statistics andregression analysis on processed data using SPSS analysis software, then analyse thelong-term performance of shares of listing Corporation, the performance of long-termstock price with different subscription objects and different subscription method tosubscribe the shares of private placement, give the empirical analysis of the relationshipbetween variables, further verify the three assumptions in the derivation of credibledegree theory, strengthen the conclusion.The last part of this article is the practical application of the theoretical andempirical conclusions. According to the actual situation of our China’s listingCorporation in the environment, we formulate and put forward some feasiblesuggestions on the placement of the policy supervision for the relevant departments.Because the private placement started to appear after the split share structurereformation, and the fluctuation of stock price was relatively large, so we can’t excludeother interfering factors. This also need future effort to improve.