Multiple Private Placement,Equity Checks And Balances And Over-investment Of Listed Companies

Private placement is one of the important financing methods of listed companies.Some studies have found that there is excessive investment behavior of listed companies to grab excess profits after IPO,which reduces corporate investment efficiency.However,no research has focused on the difference between multiple private placement companies and primary private placement companies.In the practical world,Private placement has increasingly been listed companies.And the capital market is highly praised.Therefore,this paper first discusses whether there are differences in terms of free cash flow and degree of over-investment between multiple private placement companies and primary private placement companies.Then it analyzes influence of multiple private placement interval time and subscription mode on over-investment of listed companies.Finally,based on the institutional background of China's equity concentration,it is necessary to consider whether equity checks and balances can restrain excessive investment after multiple directional add-issuance.This paper selects relevant data of listed companies in Shenzhen and Shanghai Stock Exchange from 2013 to 2016,and calculates relative indexes of overinvestment by using Richardson model.And single sample T test method is used for many times to verify difference between free cash flow and degree of overinvestment of listed company after multiple private placement.On this basis,multiple regression analysis method is used to test effect of interval time and subscription mode on overinvestment and then draw relevant conclusions.Finally,based on the institutional background of China's equity concentration,this paper studies restraining effect of equity balance on overinvestment after multiple private placement and whether equity balance can weaken influence of interval time of multiple private placement on over-investment.The research conclusions and innovation points of this paper are as follows:When existing literature studies relationship between private placement and overinvestment,scholars only pay attention to primary private placement companies,and rarely study the difference between multiple private placement companies and primary private placement companies.From the theory of free cash flow,it is found that listed companies do have obvious overinvestment behavior after multiple private placement,and free cash flow of multiple private placement companies is larger than that of single private placement company.At same time,degree of overinvestment of private placement company is higher.Previous researches on overinvestment caused by additional placement rarely considered what factors caused overinvestment,and whether interval time between multiple private placement and way of subscription could affect overinvestment behavior of company.In this paper will introduce interval time and subscription Way of these two variables to verify that there is a significant negative correlation between interval time of multiple private placement and overinvestment,that is,shorter interval time of multiple private placement,greater degree of overinvestment of listed companies after private placement;There is a significant positive correlation between subscription mode of multiple private placement and overinvestment,that is,listed companies with continuous cash subscription for new shares of private placement companies,greater degree of overinvestment after private placement,there is a rich practical significance.There is no consistent conclusion whether equity checks and balances can play an inhibitory role on overinvestment,so this paper will consider restraining effect of equity checks and balances in combination with financing event of directional private placement.Study found that equity checks and balances inhibit degree of overinvestment after multiple private placement and weaken impact of interval between multiple private placement on overinvestment.Therefore,it is reasonable to believe that equity checks and balances play a certain governance role in directional private placement,and provide a corresponding reference for listed companies and stakeholders.