The Financial Effect Of Private Equities’ Investment On A-share Listed Companies And Its Development Under The Law

In September 2011, ZheJiang Silicon Paradise Asset Management Group and Dakang Farming, a listed company of A-stock market, founded a buyout fund of 300 million RMB, which created the new cooperation mode between Private Equity(PE) and listed company, after that, this mode was copied and re-innovated by other enterprises and reached its peak of application in 2014. Now there are three main corporation modes between PE and listed company: found the buyout fund together, PE joins private placement of listed company, and PE buys shares of listed company in the secondary market. As one of the hottest investment tools in the market, how will the corporation mode for PE and listed company affect the stock price? The thesis will try to figure out this question based on the real case and data.In this article, the author gathers 100 cases of buyout fund, 18 cases of PE engaging private placement and 10 cases of PE buying shares of listed company. Then the thesis collects the closing prices of each stock and CSI 300 Index at four different times, which are one day, one week, half month and one month after the first announcement of the cooperation, and then derives the Cumulative Rate of return and Excess Rate of return of each stock. Finally the thesis comes to the following conclusions:1. The Establishment of buyout fund could stimulate the stock price to rise in short time(one day and one week later), about 70% stocks have positive cumulative return after the announcement. In the medium and long time(half month and one month later), stocks would still benefit from buyout fund. What’s more, most stocks could get excess rate of return comparing to CSI 300 Index with large range.2. If PE joins private placement or buys shares from the secondary market, the price of over 80% stocks that cooperate with PE will increase, and more stocks get their price enhanced in short time. Also, most stocks could get excess rate of return comparing to CSI 300 Index.3. For stocks whose private placement PE joins, their cumulative and excess rate of return will be higher than those stock whose shares are bought by PE on the secondary market.In conclusion, the thesis explores the effect of cooperation model between PE and listed company on stock price based on empirical research, and the result could be the reference for investors to make any decisions. In the meantime, the thesis proposes three suggestions about supervision on this cooperation mode, which are to strengthen the disclosure of information, to set up firewall system, and to crack down on illegal and other behaviors that would damage the interests of investors.