Study On Relationship Of Objects Of Private Equity Placements And Corporate Performance

With the non-tradable shares reform and perfection of China’s stock issuingsystem, private equity placements have become the main way of re-financing of the listcompany. Private equity placements have become the preferred choice for the listcompany considering re-financing with strong operability, high value-added benefits,convenient procedure, low entry cost, less expenditure. From the perspective ofenterprise itself, can be realized by attracting strategic investors to purchase listedcompany as a whole; can also by adjusting ownership structure to improve theeffectiveness of corporate governance; can also by realizing financing and debt in theshort term to improve the companies in financial distress. Along with the improvementof our capital market reform, protecting the interests of the investors have also been onthe schedule, becoming an important goal of regulatory. Admittedly, China’s capitalmarket is not mature enough. In order to further optimize the structure of investors,government supporting the development of institutional investors in China, alsoattracting foreign investors to enter the Chinese market gradually. Therefore, thegovernment issued a series of supporting policies, encouraging investors to participatein the financing of the enterprise financing decision and the internal controlmanagement, to standardize related decision-making behavior of controllingshareholders and corporate executives. Benefiting from these policies and measuresissued timely, characteristics of investors increasingly have significant influence on thedecision-making behavior of enterprise. In recent years, domestic media revealed partof equity financing of listed companies encumbered, in addition to investment projectitself lack of sustained profitability, the deviation of judgment by management oncharacteristics of investors. In the design for equity financing of listed companies, haveto think about the likely impact of investors features. On this basis, study on privateequity placements and characteristics of investors have a profound practicalsignificance. Since<Measures for the management of securities issuance of listedcompanies> promulgated by China Securities Regulatory Commission (CSRC),academic study on private equity placements has become the focus of the companyequity financing research. Making a rational judgment on the relationship of privateequity placements and characteristics of investors has been a new research direction,which attracts more and more attention of scholars. On the basis of study the literature of private equity placements, we found that the domestic research focused mainly onthe announcement effect of private equity placement, motivation analysis of enterpriseand analysis on the phenomenon that the actual control of the shareholders see privateequity placement just as tunneling. According to this, on the base of empirical evidenceof listed companies, analyze and summarize the relationship of objects of privateequity placement and corporate performance. Thus a comprehensive understanding canbe got that non-public issuance having impact on company’s long-term performance.Gaining knowledge and experience from practice can also enrich and perfect thetheoretical basis of private equity placement, in addition to, have a positive guidingrole to financing activity in our country capital market.Based on the asymmetric information hypothesis, the principal-agent theory,supervision effect hypothesis, defensive hypothesis as the theoretical basis forempirical research, excessive concentration of equity will give rise to actual controlshareholders manipulating the possibility of corporate governance, so as to damage thesmall and medium-sized shareholders profit. Core trade association shareholders arelimitedly rational. Related party transaction is a tool for tunneling. In order to achievethe personal interests and introduce passive investors, management prevents enteringactive investors. Compared with above three types investors, outside investor dependsmore on public information, can be more objective for the company to makepredictions. Therefore, objects of private equity placement inevitably contact withcorporate performance, and offering to different investors will bring different influenceto corporate performance.This paper selected A-share listed companies which approved by CSRC andsuccessfully issued from2011to2013as empirical sample. From the perspective ofinvestors heterogeneous beliefs, combined with non-public announcement of listedcompanies, objects of private equity placement can be divided into four categories:(1)Only the shareholder participation in corporate governance(CGS);(2) Relatedtransaction shareholder(RTS);(3)Director, supervisors and senior management(DSM);(4) External investors (OUT).Above four types are explained variable. Thispaper from debt paying ability, profit ability, operating ability, growth ability and cashflow ability this five aspects, selected representative financial indicators to build ascore model about corporate performance, and the score is calculated to measure thecompany’s performance, as explained variable. In addition to, scale of company,financial leverage, operating leverage and return on stocks can be regard as control variables in order to test the purchase object with the company’s operating performanceof multiple regression analysis. Through the method of regression analysis to verify thehypothesis is put forward, so as to demonstrate the directional issuance object existsbetween the inevitable contacts with corporate performance. Through regressionanalysis, we can draw the conclusion: consider participating in corporate governancewithout related transactions of shareholders, the management of the core businessscope of shareholders, directors, supervisors and senior management has adverse effecton the corporate performance. However, for the outside investors unrelated directionalissuance has a beneficial effect on corporate performance.Paper based on the background of private rights, to information asymmetryhypothesis and supervising the hypothesis and defense hypothesis as the theoreticalbasis, which leads to the orientation object of rights and corporate performancecorrelation research, and to improve the public issuance of equity financing methods,reduce large shareholders and minority shareholders proxy conflict, provides a way toimprove company performance.