The Resarch On Influence Of Major Shareholders Participating Private Placement On The Corporate Performance

Private placement is a non-public offering of stock behavior of a listed company, which raises funds through the issue of shares to a few specific objects. Private placement firstly appeared in some developed countries like Britain and the United States, which is called private equity in foreign. In May 2006 China Securities Regulatory Commission promulgated the Administrative Measures for the issuance of securities of listed companies, that makes private placement officially became a way of refinancing of listed companies.Private placement is popular in listed companies because of its simple issuance procedure and low cost. Currently private placement is the main mode of financing of listed companies in China. As the main mode of financing of listed companies, private placement is beneficial to longterm development of enterprise in theory. But many studies from scholars have shown that after the financing through a private placement, company achievements have a downward trend. Private placement most likely become a tool of benefit delivery by major shareholders.This article discusses the issue of major shareholders participating private placement from longterm stock price and business performance. Analysis the effect and consequence of major shareholders participating private placement according to stock price and business performance after participating. Overall discount rate of private placement is generally high in China. Major shareholder asset injection revaluation rate is also high. The higher proportion of major shareholders subscription, the larger right of control the company. These three areas is likely beneficial to major shareholders taking use of private placement to benefits transfer. So this article holds the view of major shareholders subscription discount rate, major shareholder manner and subscription ratio have a certain influence on longterm performance.This article uses 142 listed companies from 2009 to 2012 which major shareholders participate private placement as sample. Use the method of Avent Analysis, and use the cumulative excess return for evaluating stock price effect in three years after major shareholders participate private placement. Use the method of Factor Analysis, select 11 financial indicators as ROE, return on total assets, operating margin, total asset turnover, current asset turnover, accounts receivable turnover ratio, debt ratio, cash ratio, quick ratio, total asset growth, operating profit growth to evaluate performance of the company respectively from four aspects as profitability, solvency, operating capacity, capacity of development. By computing the composite score of performance of the sample companies, observe operating performance trend of listed company in three years after participating private placement. And analysis the effect of three factors as subscription proportion of major shareholders, subscription way and subscription discount rate on longterm performance after participating private placement. The empirical results show that the higher discount rate of major shareholders subscription, the worse enterprises perform in longterm. Longterm performance of assets subscription is worse than cash subscription. Ratio of major shareholders subscription has a negative correlation with longterm performance.This paper consists of six parts. The first part is the introduction. Introduce the article’s background, the significance of writing, research ideas and propose the innovation, research content and method. There is also a literature at home and abroad review and summarizes in this part. The second part is related concepts and theoretical basis. The third part analyzes the Influence mechanism of major shareholders participating’s motivation and the way on company performance. The fourth part introduces the development path, overall situation and feature of major shareholders participating private placement in China. This part also introduces current situation of major shareholders participating private placement, and current situation of company performance after major shareholders participating private placement. The fifth section uses 142 listed companies collected as sample to do empirical research. And obtains research results. The sixth part is the conclusion and policy recommendations on the research results of this paper.The main conclusion is that firstly there is a downward trend on company achievements after major shareholders participating private placement. Secondly, the more difference between subscription proportions of major shareholders and their original proportions, the worse enterprises perform in longterm. Third, the more convertion of major shareholders participating private placement, the worse enterprises perform in longterm.Fourth, longterm performance after major shareholders taking assets subscription is worse than cash subscription.