The Research Of Private Placement And Wealth Effect Under The Different Nature Of Controlling Stake

Since 2006, the regulators introduced the regime of private placement as a refinancing tool for listed companies, it has gradually become a major equity refinancing. According to relevant statistics, the 2006-2015 decade of A-share listed companies conducted a total of 2,475 private placement(of which there are 1,455 listed companies had at least one private placement financing), the total funds raised a total of 4,067.24 billion yuan. According to the nature of controlling stake, Chinese listed companies can be divided into state-owned holding companies and non-state-owned holding company, which is one of the characteristics of the market. And "state-owned enterprise reform" is highlighted by the party eighteen report, then it has become the focus of government policy and the important topics of common concern to the community in recent years.This paper introduces the historical background, the institutional arrangements of the private placement, and detailed analyzes the private placement market of A-share market from 2006-2015. Then the sample of private placement is divided into state-owned holding company and non-state-owned holding company, it studies the short-term wealth effect of private placement by the method of event study and the longterm wealth effect of private placement by the method of buy-and-hold abnormal earnings. At last, basing on the corporate governance index, it constructs the multiple regression model, empirically analyzes the factors affecting different wealth effect between state-owned holding companies and non-state-owned holding company.By the method of event study, the results show that the private placement have a positive short-term effect, and by the method of buyand-hold abnormal earnings, the results show that the private placement have a positive long-term abnormal returns. Also the performance of abnormal returns of non-state-controlled group are better than statecontrolled group. Through the analysis of multiple regression model, the results show that the nature of controlling stake, subscribers of private placement, subscribing ratio of major shareholders, and subscribing way of major shareholders have a wealth effect impact on private placement. According to the regression model based on corporate governance index, the result shows that the ownership concentration, ownership balancing degree, two state level, the proportion of independent directors, the board size and the proportion of managerial ownership have an impact on different wealth effect between stateowned holding companies and non-state-owned holding company.The paper suggests that major shareholders of listed companies should actively subscribe shares of private placement,investors can appropriately invest stock whose price is below the issuing price, regulators should regulate participants’ the behavior and fight against insider trading to avoid private placement becoming the transport tool of benefits. In the process of reform, the state-owned shares should be properly dispersed, the checks and balances of the major shareholder should be strengthened; From the corporate governance, chairman and general manager should avoid concurrently by the same person, members of the board should be controlled at an appropriate scale, the companies should employ a certain proportion of independent directors and launch the appropriate equity incentives to managements and employees, in order to enhance the governance of state-owned enterprises.