Research Of Tunneling In Private Placement

Private Placement means the listed company should issue new stocks with non-public to a few specific investors.Private Placement is important means for the listed companies to raise funds quickly and introduce strategic investors,and the effective ways to mergers and acquisitions and reverse takeover.So it gets a favors of listed companies and the recognition of the market.Now it has gradually become the mainstream of the equity refinancing in China.However,Under the background of "the single-large shareholder" in listed companies,the Private Placement is often manipulated by controlling shareholders to damage the interests of small and medium investors by forcing the issue pricing down,injection of bad assets and the high cash dividends,so as to it become the tool for tunneling.In this background,this article is based on Jinghua Pharmaceutical Enterprise to study the tunneling of private placement.Firstly,this article analyzes the domestic and foreign literature about the Private Placement,tunneling and the relationship between both,it also summarize the development course of Private Placement,the present situation and the tunneling theory.Secondly,this paper expounds the related background of the Private Placement,including Private Placement objects,the process of Private Placement and shareholding change.Thirdly,we analyze the motivation and the behavior of tunneling,.including the selection of price setting,the private placement discount rate,earnings management,cash dividends policy and the related party transactions.The article shows that Jinghua pharmaceutical enterprise convey profit to the major shareholder by controlling the shareholders' general meeting time to increase the discount rate,implementing earnings management to reduce performance before Private Placement and raise performance after Private Placement for low issuance price and high cash dividends and improving cash dividends.In addition,the performance after Private Placement is increased,due to the existence of the stock lock-up period and the risk of equity pledge,we question the real reasons of the performance promotion.The related transactions data after private placement is abnormal,which also deepened our question.