Impacts Of Private Offerings On The Stock Price And Corporate Performance

Due to China’s securities market has introduced a series of new laws and regulations since 2006, non-public Offering (or Private Placement) has developed rapidly. And it already becomes the most important way of re-financing in the stock market due to its unique advantage. And since the Shenzhen Small and medium-size Enterprise Stock Market has introduced in 2004, the SMEs also play an important role in the private placement market. Therefore, the research for the SMEs’private placement is meaningful. By study the relevant researches, this paper aims to solve the following issues:(1) Whether there is an obvious announcement effect at the time of the small and medium enterprises’the private placement issue in China. (2) What influences will be produced on the operation performance of the small and medium enterprises? (3) Whether the distinct types of offerings perform different influences on the performance? (4) Whether the several private placement theories can be applied to the Small and Medium Enterprises market.Aiming to solve these issues, firstly, this paper reviews the former research results and the practice in China including developing history, laws and regulations, also pattern types. Secondly, this paper selects the samples from the Small and Medium Enterprises market in the duration from 2007 to 2013, summing to 251. Then uses the event study method to calculate and check the excess earnings during the event windows. Thirdly, the thesis adopts the factor analysis method to study the sample enterprises’performance, via constructing a performance function with the selection of 13 indicators, calculates and scores the performances in the former and latter three-year periods.This paper demonstrates that the private placement of SMEs indeed have an announcement effect on the short-term. Meanwhile the effect is much more notable before the announcement date, which can suggest that there is an information asymmetry phenomenon in the market. Nevertheless the long-term business performances of the overall sample firms are not ameliorated remarkably, only the raised money invested to M&R can improve the performance according to the samples, which reveals the market timing selection in the private placement market and the investors’have overestimate the prospects.To cope with the phenomenon above, this paper provides some recommendations, including reinforce the strength of examining the private placement; strengthen the information disclosure system to reduce the information asymmetry; regulate the pricing date of the private placement; intensify the review of the issue’s feasibility report and the follow-up application of the funds. Meanwhile there are some reasonable advices for the common investors.