The Research On Asset Injection And Tunneling In The Process Of Private Placement

Since the shareholder structure reform, the private placement has become an important way of equity refinancing of listed companies in capital market. Because of its unique advantages of low issue conditions, simple procedures, pricing flexible, the amount of funds freedom, the private placement is favored by many listed companies. In addition, the private placement can achieve inject quality assets into listed companies, completed holistic listing, the introduction of strategic investors; strengthen control rights of large shareholders. However, due to the private placement involves the reallocation of equity and resources between existing shareholders and the new shareholders, shareholders who have control rights are likely to use it to transfer of benefits, harming the interests of minority shareholders. Also, because of our rules and regulations related to the private placement is not perfect, the objective of environmental conditions which provide the possibility for the major shareholders’ tunneling behavior.Currently, many scholars conducted a study of the private placement and transfer of benefits, research focused on private placement mode, private placement announcement effect, discount issue of private placement, tunneling in the private placement and so on. However, due to the start time of private placement research is late, the phenomenon of domestic private placement related research is not perfect, it needs to be further discussed.Major shareholders of listed companies inject assets through private placement into the listed companies is the more common. The major shareholder inject quality assets into the listed company, which is conducive to resolving the remaining issues of the period of split share structure, improve the industrial chain of listed companies, reduce related transactions and horizontal competition. However, because of the prevalence of" only one big share" phenomenon, making the agency problem between large shareholders and minority shareholders is particularly serious, it also resulted in a growing number of inject assets thought private placement phenomenon hidden a chain into the listed company transfer benefits to the controlling shareholders.How to use the private placement to inject assets to transport benefits, what impact on small investors does the transfer of benefits transport phenomena caused, these issues are of great significance to be further investigated and discussed.This paper analyzes a combination of theoretical analysis and case studies to explore whether there is a transfer of benefits in the private placement of assets injection, the delivery methods and means interests which large shareholders taken, and the impact of the transfer of benefits and economic consequences resulting from this process, and offer some suggestions for government regulators and small investors.This paper is divided into five chapters; each chapter structure is arranged as follows:Chapter Ⅰ is the introduction. This chapter is divided into four parts, introducing the research background and significance, research ideas and frameworks, research methods and the expected contribution.In recent years, major shareholders of listed companies and related parties conducted through a private placement of assets injection behavior has become a major highlight of the capital market.Chapter Ⅱ is a literature review. The author collected the relevant literature of private placement, to classify and organize these documents, the literature review includes four aspects, the reason of private placement, the relationship between private placement, assets injection and transfer of benefits, the phenomenon of private placement discount, private placement announcement effect.Chapter Ⅲ is the theory and analysis of the private placement of assets injection. This article defines three concepts of the private placement, asset injection, transfer of benefits, then followed by the analysis of this article describes the two theories involved, one is agency theory, the other is information asymmetry theory. A review of China’s relevant laws and regulations of the private placement is also contained in this part, followed by the contrastive analysis of three domestic equity refinancing, analysis the motivation and status of assets injection thought the private placement process, as well as the main mode of transport benefits.Chapter Ⅳ is mainly concentrated on the case studies. This chapter introduces the backgrounds of Jingyuan Coal Industry And Electricity Power Co.,Ltd, including programs and processes of the Company’s private placement. Secondly, analyzes its way to transfer of benefits, and the economic consequences of it.Chapter Ⅴ is conclusions, recommendations and future outlook. Conclusions to the full text of this chapter, make relevant policy recommendations, and noted the limitations and further research direction.Through theory and case studies, the paper concluded the following four points:(1) Private placement conducted by the major shareholder assets injection this process has the phenomena of tunneling exists; there are ways to develop a low placement price, inject into poor quality assets, high value asset evaluation, the use of cash in behavior.(2) Private placement conducted by the major shareholder assets into this process is not limited to the interests of transportation methods inject the assets themselves, will also be taken in other ways, multiple emptied of listed companies to meet their own interests.(3) Private placement of asset injection type is not necessarily have a positive announcement effect in short-term, due to the transfer of benefits issues, such private placement may present short-term negative effects of announcement or effect is not significant situations.(4) As a result of the transfer of benefits, the largest shareholder not only to plunder interests from minority shareholders, but also had a negative impact on listed companies’ financial and operational performance.Theoretical contribution of this paper is to analyze the major shareholder through private placement asset injection motivation, current situation and the way in which the transfer of benefits, and by way of case studies will be presented specific transfer of benefits, to analyze its economic consequences, it is possible to lay the foundation for future research, and to provide a reference for the specification of the behavior of the private placement to provide a reference for the investment behavior of small investors. Limitation of this article is that this research is merely a case study in the private placement of the company’s assets into the process of transfer of benefits, so that it is difficult to cover the full way of private placement transportation problems in the asset injection process. Since the company which was chose as the case issued its own private placement is in2013, it is difficult to study its largest shareholder wealth effects in the long-term. In addition, due to the missing in database and the errors in the procedure of data collection, there is inevitably some mistakes and defects exist in this dissertation.