Empirical Study On Financing Efficiency Of Private Placement In Chinese A-share Market

After the official promulgation of the "Administrative Measures for the Issuance of Securities by Listed Companies" in 2006, the private placement, took to the stage of China’s capital market. It is only seven years since it was put into practice that great achievements have been made in both numbers and scales. When the private placement was growing vigorously, there were frequent exposures of problems concerning major shareholders taking advantage of private placement to realize their interest transfers, and misappropriating by means of private placement. Private placement, as one of the most significant methods of equity refinancing at present, its efficiency in raising funds is of great importance at both the micro and macro levels.Based on the analysis of the past literature of private placement, the paper manages to classify private placement cases based on the results of implementation after the plan announcement was made public. And it measures the financing efficiency with the success of the issue implementation. By this retrospective study, the writer aims at finding out whether the market is capable of predicting the implementation result of the private placement around the date on which the board of directors announces the issuance plan. The findings show striking positive announcement stock price effects on the private placement in our A share market. Secondly on the day the plan is made public the market fails to judge whether the private placement could be implemented in the future. Thirdly after the announcement day the market will quickly correct share prices. This good ability to judge and identify is helpful to boost the efficiency of capital allocation.The paper, on the basis of controlling market and company factors, makes a regressive analysis between the final result of the private placement and the offering target, purpose of the private placement. The finding shows the private placement by the institutional investor is more likely to be successfully implemented than by others. The project-financing-oriented private placement is more easily to be successfully implemented than that for other purposes.