Cash Holding Period, Institutional Investors And Listed Companies Performance

Private placement has become the first selection of the listed companies’ equityrefinancing since our country implements the equity division reform in2005. Privateplacement has become a hot research topic in both theoretical and practical circles, but asfor the effect on listed companies’ performance, people have different opinions.Theexisting empirical studies on private placement have focused on the announcement effect ofdirectional issuance, the benefits transferring in the private placement, and influence ofdifferent additional object reacting to investors’ returns, etc. In the meantime, researches oninstitutional investors mainly focus on corporate governance and equity financing, however,there is little literature studying the private placement’s impact on corporate performancefrom the perspective of institutional investors.So this paper is written in two dimensions,namely, the cash-injection-class private placement’s impact on corporate performance andwhether institutional investors introduced by cash injection will stake in listed companiesfor a long time.Basing on the reference to relevant theory and previous research and adopting themethod of combining theoretical analysis and empirical research, using the theory ofinformation asymmetry, agent cost theory, this paper selects a sample data of those listingcorporation which successfully implement private placement from2006to2011forresearch. Then use event study and establish a performance evaluation model.In the processof empirical analysis, this paper mainly adopts the descriptive statistics analysis, correlationanalysis and multiple linear regression analysis method to test the model. And the empiricalresults arrive at two conclusions:（1） Cash injection have significant correlationrelationship with the performance of listed companies. This means when listed companiescarry on equity refinancing by using cash-injection-class private placement to introduceinstitutional investors, the market reflects that corporation performance has apparentgrowth;（2）Institutional investors’ holding period and the performance of listed companieshave significant positive correlation, which means when investors choose long-term stakesin listed companies, the enterprise’s performance is improved obviously; on the contrary, ifinstitutional investors hold shares of a listed company for a short time, the enterprise’sperformance makes no significant changes.At the end of the thesis, related suggestions are put forward from the system level onthe basis of empirical analysis results:（1）Encourage cash-injection-class private equityrefinancing.（2）Strictly and appropriately restrict institutional investors’ holdings limitedsales period. And then the deficiencies of this dissertation are pointed out.