Research On Market Timing Of Listed Companies Seasoned Equity Offering

In recent years,research on equity refinancing of listed companies has been not interrupted.Theoretical research after MM theory has been constantly optimized.The critical assumption of “efficient market” has been given up.In these years,being affected by behavioral financial theory,more domestic and foreign experts and scholars start to transform research perspective when they are researching the influence of marketing environment on capital organization and financing selection of enterprises and adopt the standpoint that investors are irrational or the market isn't completely effective.It is discovered in research that marketing timing effect indeed exists in corporate's investment behavior.There is an obvious gap between China and western developed countries no matter in overall market circumstance,governance model or financing cost of enterprises.Thus,some classic financing theories of western scholars fail to explain financing behavior of Chinese listed companies.Previously,China's stock market was in short of standardization,the phenomena of same stock with different rights is longstanding.In order to solve the problem,split share structure is executed in China.Such reform realizes full circulation of market.Nevertheless,for listed companies in China,there are many problems existing in their refinancing behaviors,such as unreasonable governance mode,low utilization ratio of capital gained from financing etc.Under such circumstance,research and analysis of refinancing behavior of Chinese listed companies is of quite realistic significance.After referring to and learning from former theoretical research results,based on the Market Timing Theory,companies are inclined to equity refinancing if there is rise of share prices,which is relatively acknowledged by financial field.Through research of the paper,we can find that company is more likely to conduct equity refinancing when institutional investors have relatively high needs of investment.To the contrary,when institutional investors have relatively low demands,there is small possibility for company to carry out equity refinancing.This paper takes equity refinancing of listed companies in China's A-share market as research object to make a comprehensive study on market timing and its impacts in China through referring to research results of domestic and foreign scholars.The article is divided into five parts.The first part is the introduction which analyzes the significance and background of research on refinancing of listed companies.Literature review is also included in this part.Domestic and foreign theories or concepts are firstly summarized.Then,the author has sorted through and made brief description of research on market timing theory.Next,pertinent literatures about possible proclamation effect caused by equity refinancing of listed companies are sorted through and reviewed.The second part: financing modes of China's listed companies are compared and current situation of equity refinancing in China has been described.In addition,it summarizes financing situation of listed companies after implementing split share structure in China.Part three is an empirical study on equity refinancing of listed companies.In the part,the total data sample of listed companies between 2009 and 2013 is utilized firstly to make a regression analysis of equity refinancing's market timing.In the empirical process,stock excess returns of last refinancing,turnover rate,volatility,financial leverage of present refinancing as well as fixed assets,size of company are taken as explanatory variables of regression analysis.Dummy variable which indicates whether the listed company will conduct equity refinancing is taken as explained variable.The variable is 1 if there is refinancing,otherwise the variable becomes 0.In the end,it is indicated that,through logit regression analysis,the listed companies in China will confront market timing when carrying out equity refinancing.On account of important position and function of institutional investor who is deemed as market participant,this paper has made further analysis that whether the needs of institutional investor will affect market timing of listed company's equity refinancing in this part.It aims at making a more comprehensive description of market timing.Through model modification and after reuse of Logit regression method,we find that institutional investors will affect the time of listed companies' announcement of equity refinancing.Besides,such influence is differently reflected in additional sample and rationed share sample.Afterwards,we have verified whether such influence of institutional investors is because they can get some “information” in advance.We find that in the regression analysis which takes long-term investment rate of listed companies,there is a positive correlation between SEO +0 of listed companies' equity refinancing,variables measuring needs of institutional investors and high,medium and long-term rate of investment.Meanwhile,it is obviously in 10% and 5%.The empirical result of equity refinancing year indicates that institutional investors are informed of good investment opportunity for listed companies in advance.So far,partial analysis of timing selection of Chinese listed companies is completed.Part four firstly researches impact of listed companies' announcement of equity refinancing on the share price.After analyzing the [-10,5] window phase of listed companies which announce equity refinancing,we find that listed companies have remarkable AAR(Average Abnormal Return)one week before announcement of equity refinancing,which again verifies our analysis in chapter five that institutional investors may be informed in advance and take exception measures so as to cause fluctuations of stock price.Then,the sample is analyzed by divided into additional distribution and rationed shares.We find that majority of additional new stocks have positive AAR and CAAR every day;while those of rationed shares are mostly negative.It is easy to see additional new stock has better effect that rationed shares.Subsequently,we have made specific and in-depth research on impacts of listed companies' equity refinancing on capital structure of company.The result is that timing selection of listed company when conducting equity refinancing in A-share market will exert long-term influence on its capital structure.Such sustained influence is mainly reflected in company's short-term and long-term repaying ability.The last part is the conclusion of paper.Research process of the paper is briefly reviewed in the part.In addition,result,defect,and deficiency of research is concluded.What's more,some policy suggestions on improving Chinese market environment are proposed.