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The Determinants On The Pricing Of The Private Placement For The Listed Companies Of The NEEQ

Posted on:2017-12-07Degree:MasterType:Thesis
Country:ChinaCandidate:M Y ZhangFull Text:PDF
GTID:2349330512459926Subject:Finance
Abstract/Summary:PDF Full Text Request
The NEEQ is an important part of China's multi-level capital market, but also boosting the power of China's economic reform and industrial transformation. Since the NEEQ established in 2013, it has appeared a rapid development. At the end of 2015, the NEEQ had been a nationwide stock exchange, and the number of its listed companies had reached 5190. The model of development and operation of the NEEQ used the style of NASDAQ in America. The NEEQ has created many first times in China's equity market, such as it's the first time to introduce the market-maker system, the layered mechanism and promotion mechanism of all. All this indicated that the growth of the NEEQ not only show up as the scale extend, but also as mechanism completing and updating.Development of the NEEQ is an effective way to solve China's SMEs lack of finance. Under the mode of direct financing, SMEs also could not finance by issuing enterprise bond, because the standards of bond-issuing is stringent about issuing body. The same situation appeared in our A-share market, because of the stringent listing standards in A-share market, equity financing is not suitable for SMEs. The emergence and development of the NEEQ laid a foundation for SMEs to achieve equity financing. The NEEQ focuses on offering SMEs services, and provides convenience for SMEs finance by its lower listing standards. The NEEQ provides platform for SMEs equity financing, at the same time it adds the mode of equity finance, such as private placement and preferred stock. The private placement approach is the most often used and convenient way for listed companies equity financing of the NEEQ.By the end of 2015, the amount of the implemented private placement in the NEEQ is 3620, and the total financing amount of all private placement is up to 138.98 billion Yuan,97 percent of the private placement had happened during 2014-2015. With the development of the NEEQ and the number of listed companies increased, the amount of the implemented private placement is also increasing, which means the function of the NEEQ is accepted by market and listed companies. Using the way of private placement to equity finance is efficiently adopted by the listed companies, which shows the NEEQ has given initial results in solving China's SMEs lack of finance, achieving economic reform and industrial transformation. Besides the advantages and achievements, we should also see deficiencies and problems. Due to the lower listing standards, the listed companies of the NEEQ have different quality. On account of the imperfect mechanism and rules, the supervision of the NEEQ does not adequate to cause information-asymmetry in the market. The same goes for the private placement, the less stringent standard approval and inadequate regulatory resources of the private placement might result in irregularities, or give rise to the listed companies achieve the purpose of assets misappropriating by financial cheating or ftauding.Under the background of China's economic reform, the development of the NEEQ has been of great concern by domestic and foreign markets, the private placement of the NEEQ also have become a hot topic between domestic and overseas scholars. Based on the current economic hot spots, this paper regards the pricing of private placement as the research direction. The main contents of the paper is that research the determinants on the pricing of the private placement for the listed companies of the NEEQ. Because of liquidity shortage, a great proportion of emerging industry and information asymmetry, the pricing of the NEEQ is a tough problem, and the price of stock could not response to the real values of the enterprises assets. The pricing of the NEEQ is a problem demanding prompt solution, and researching the stock price of private placement in the NEEQ is also about pricing problem which demanding solution as soon as possible.Both in order to find factors that influence the price of private placement, and provide a reference for what the indicators should be selected when the private placement pricing, the paper researches the determinants on the pricing of the private placement in the NEEQ. The Paper is possibly to make some contribution to providing evaluation index on analyze whether the price is reasonable and effective or not, also can provide the reference basis for supervisory authority of the NEEQ to construct a price evaluation system. The price feature of the private placement in the NEEQ reflects the problem in the market to some extent, and estimates some phenomenon or behavior by consequence of price analyzing. As the saying goes if we see a point, we can see completely.By using both the non-parametric test and parametric test method, the paper researches the relationship between the individual factor and private placement price by descriptive statistics and rank sun test, meanwhile analyzes the combined effect of multiple factors on the price by multiple linear regression. Based on the particularity of the NEEQ's system and market, the paper selected stock transfer mode, objects, and issuing company's financial indicators as factors to research placement price, and each one research direction has choice several relating indicators. The stock transfer mode of the NEEQ is the biggest difference between other equity markets. The mode of shares transfer in the NEEQ is a combination of negotiating transfer and market-maker system, which provide a reality basis to factors selected. Based on the market-maker system, a part of special object of private placement has appeared, that is market-maker. Through empirical research on the relationship between selected factors and the price of private placement, the paper found those factors had a significant impact on pricing.This paper consists of six parts. The first part is the introduction. The introduction includes the paper's background and significance, describes the content and research methods, and summarizes the innovations. The second chapter is the review, which collects the domestic and foreign literature from the price discount, the determinants on price and the economic consequences, and summarizes the available theories and method using in the paper. The third chapter sketches the history of the NEEQ and the implication of the private placement This part compares the difference of private placement between A-share market and the NEEQ, and describes the current situation and trends of the private placement in the NEEQ. The fourth Chapter analyzes and price of the private placement through depicting the distribution of absolute value and relative value of the price, and researches what the influence on the price from the different industries and different factors. The fifth Chapter researches the combined influence between the price and the factors by multiple linear regression, and draws a conclusion about the direction and degree of the factors. The last part combines the statistical conclusion and realistic problem, in order to put forward the suggestion to solve the problem. In the end, the paper states the expectation of the NEEQ from scientific research and reality.There are some conclusions can be drawn:1. The listed companies from different industries have different price of private placement. Enterprises of high technology industry and high-growth industry have higher price than the traditional industries, such as IT industry, health care industry and finance.2. Different transfer modes of stock make price different. The companies using the transfer mode of market-maker have higher price than the companies with negotiating transfer. Because the liquidity of the stock would have improved by stock transfer mode's alteration, the liquidity premium decreases which causes the stock price increases. The extent of information asymmetry is serious in the NEEQ which makes investors difficult to identify the quality of companies.3. When the object of private placement containing market maker or related parts, the price would be higher than the other do not contain. Issuing additional directional issues to market maker at a low price might bring about illegal action or nonfeasance happening.4. The financial indicators have a significant impact on the price of private placement. When the financial condition of the listed companies is sound, such as the great profitability, solvency and service power, the price of private placement would be higher. It means the realized price is reasonable in a certain extent, which reflected the production and operation of the companies.5. There is the phenomenon of the controlling majority shareholders'tunneling in the NEEQ. When the shares'percentage of majority shareholder is higher, the price of private placement would be lower, so that the majority shareholder could transfer the profit to the related parts at a low price.The development of the NEEQ have innovation and problem existed, and the private placement system is also constantly developing and completing. Now the problems and shortcomings which the NEEQ have are not isolated, so the solutions of the problems are interactional. In order to realize the pricing of private placement normalized and rationalized, and prevent the phenomenon of controlling shareholders' tunneling happened, we should improving the private placement mechanism, information disclosure requirement, punishment mechanism and so on. The different mechanisms of the NEEQ have complementary relations; all of those enhance the effectiveness of market and promote the NEEQ. If only the efficiency of the market raised and the mechanisms completed, the problem of unreasonably pricing of private placement would be solved fundamentally, as well as other shortcomings.
Keywords/Search Tags:Private Placement, The NEEQ, The Determinants on the Pricing, market-maker system
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