A Study On The Behavior Of Private Placement's Tunneling And Influence Factors With Large Shareholders' Participation

In recent years, with the development of capital market in China, in order to meet the needs of the rapid financing of listed companies at the same time, our country launched the reform of non-tradable shares and implemented a series of laws and regulations of private placement in “Administrative Measures for the Issuance of Securities by Listed Companies”. Private placement rapidly beyond public placement and rights issue have become the main way for equity refinancing of listed companies. However, due to the regulatory authorities and market's low disclosure requirements, simple issuance process and private placement's main role of refinancing and assets reorganization for listed companies, the private placement could not get rid of the fate of the manipulated by large shareholders. At present, the large shareholders' participation is common among private placement in the market of issuance and the tunneling is to follow.Firstly, in this paper, we review literatures about the private placement, tunneling with large shareholders participation and influencing factors. We not only discuss the implications and measure method of the tunneling, but also elaborate the related theories of large shareholders' tunneling in private placement. Then, we study the behavior of large shareholders' tunneling in private placement in two directions: the shares' price performance before and after the private placement, whether large shareholders to participate in or not. On this basis, we not only takes the listed companies, which issued private placement in A-share market between 2010 to 2013 as research samples, but also builds a multiple regression model and empirically studies the impact of private placement's characters and listed companies' characters on the tunneling of large shareholders.The empirical results show that, in private placement with large shareholders participation,there is a transfer of wealth phenomenon and in the absence of large shareholders, there is almost no tunneling. Large shareholders tend to manipulate prices in order to subscribe for the shares of private placement at a low price, but with the passage of time, the number of shareholders' tunneling of listed companies and the transfer of tunneling amount gradually reduced. In addition, the issuance of the scale, financial leverage and discounts is in proportion to the number of large shareholders' tunneling and the institutional investors' participation, the number of issued objects, the offer type, the market characteristics, the growth of the company and the company scale is inversely proportional to it.