The Performance Change And Reason Of Chinese Listed Companies With Seasoned Equity Offering

Seasoned Equity Offering (SEO) is an important way to raise money for listed companies after the initial financing. In1998SEO has been implemented in our country, which triggered the first seasoned Equity Offering frenzy in2001. The securities and futures commission enact policies to improve the precondition of SEO. The number of companies adopting SEO for fund-raising has decreased from2002to2005.After that the securities and futures commission reduce the precondition of SEO in2006,and at the same time cancel the limit of financing volume, which result in SEO becoming the main way again. In our country listed companies prefer adopting SEO to raise money because of the low barriers to entry and massive funds.After SEO the substantial increase of funds of listed company is the most direct change, which provides a sufficient condition for the company to improve its performance. So, in theory the company performance should be increased after SEO, however, at present a lot of research results at home and abroad, by contrast, a large scale of companies present performance getting worse after issuance. Research on the change of performance and the reasons for changes in the results of listed companies in China can reveal the existence of the phenomenon of SEO decline in performance on China’s capital market. On the other hand, the analysis of the reasons of performance changes can help to find out the way to standardize SEO behavior, and the proposal to improve the quality SEO policy. This is conducive to the healthy development of capital market.Descriptive statistical has been adopted to analysis of the performance of the A-share listed companies SEO through the collection of sample data. In order to avoid the impact of the outcome of individual-specific value, this article uses the selected indicators to measure the median rather than the average of the results and ROE, operating margin and revenue growth for the company’s performance are adopted to analyze the results after SEO. This study will help investors understand SEO of listed companies and help them correctly evaluate the value of the company issuing new shares, providing a reference for the listed companies to enhance the use and management of the funds collected by SEO. And this will also help the regulator regulate SEO of listed companies to enhance the quality of SEO. The disadvantages of this study mainly including three aspects. Firstly, the exam time is limited, only including five years from two years before SEO to two years after SEO. Secondly, Only ROE, operating margin and operating income growth rate are take into consideration in descriptive statistical analysis. Thirdly, the focus of this article is on SEO, however, the detail of directional Seasoned Offering and public offering, which are the way of SEO, are not included. Future scholars can make a comparison of directional Seasoned Offering and non-directional Seasoned Offering or make a comparison of SEO and allotment of shares to make the research a more in-depth one.