Research On Long-term And Short-term Excess Returns Of Private Placement Of Listed Companies

Directional add-issuance,occupying a dominant position compared to other financing means such as equity financing,bond financing and etc.,is so far one of the most important methods employed by listed companies in refinancing.The obvious advantages of directional add-issuance are the most simple approval process and the most relaxed financial requirements for approval.In 2016,there were 795 successful cases on directional add-issuance among 3000 companies in A-share market of China,which accounted for 26.51% of the total A-share market,thereby demonstrating that directional add-issuance is one of the most preferred financing means by demanded companies.Among various significant announcements in A-share market,directional add-issuance has the biggest effect on share price volatility.Both institutional investors and individual investors exhibit great interest in directional add-issuance regardless of directly involvement in private equity placement subscription or buying in the secondary market.In addition,the choices of various kinds of public offerings and private placement products focusing on directional add-issuance enriched the participation approaches for minority investors.For the minority investors,they are in a great disadvantage because of their limited capital available and the insufficient information about the market.This paper analyzes the major factors contributed to the possible excess returns for minority investors from directly transactions through the secondary market.This paper introduces the optimized multifactor model to explain the share price volatility caused by directional add-issuance using variables through event information,financial data of fundamentals,market sentiment information,etc.This paper aims to help investors,especially the minority investors with limited capital,to better understand the effect of directional addissuance,so that they can make the optimal investment choices.The main results of this study are: In China,directional add-issuance and market index have distinct effects on short-term excess returns.The operating performance and profitability of listed companies are significant to medium-term and long-term impact on excess returns and their impacts grow with time.