The Research Of The Performance Of Private Placement In China's Listed Companies

As the development of our country's economy and capital market,the way of seasoned equity offering(SEO)has been diversified.Since China Securities Regulatory Commission(CSRC)promulgated and implemented the “the issuance of securities of listed companies management approach” in 2006,private placements began to flourished and become the most popular way of SEO gradually.However,private placements has flourished for just a short period of time on China's security market,domestic research on private placements mainly focuses on the study of announcement effects,offering with discount and so on,there is rare study on both market reaction and operation performance,and their conclusions are different with each other.So the study on both market reaction and operation performance based on the large scale of statistics will help us get the whole pictures of the reflection of private placements,besides,it will also enrich the theoretical research system of private placement in our country and provide guidance for supervision departments?listed companies and investors.There are mainly two parts in this paper to analyze the reflection of private placements.The first part is the research of market reaction of private placements.By using the event study method,we calculate the average abnormal returns(AAR)and cumulative abnormal return(CAR)of event windows(-10,10)to analyze the announcement effect;then,using the buy-and-hold abnormal return model to calculate the buy-and-hold return(BHR)and buy-and-hold abnormal return(BHAR)to analyze the long-term market reaction.The second part is the research of operation performance of private placements.By using the factor analysis method,we calculated the score of operation performance based on financial indicators of listed companies,and then analyze the variation of operation performance around private placements.The conclusion of the research can be concluded as below: firstly,the investors will earn high abnormal returns if they buy in the stocks before the announcement day,if the investors hold the private placements stocks for a long period,they will also earn abnormal returns,but there may be some risk,and the companies' operationperformance cannot be improved significantly through private placements.Secondly,when the investors contain the controlling shareholders,the market reaction is better than the private placement of non-controlling shareholders for both short term and long term.However,the operation performance of the private placement that contains controlling shareholders is better than the whole samples for short period,but worse for long period.Thirdly,BHAR of the companies which have been invested with cash is observably better performance than the ones been invested by non-cash assets for period 3 months and 6 months,but worse for period 12 months?24 months and 36 months.For operation performance,the companies which have been invested with cash have better performance than the ones that has been invested by non-cash assets.Through the multiple regression models,we found that there is a significantly positive correlation between the CAR and discount and negative correlation between CAR and ownership concentration.Meanwhile,the BHAR has significantly negative correlation with discount and the goal of private placement,has positive correlation with investor type.At last,this paper provide some suggestions for supervision departments?listed companies and investors based on the conclusions.