Research On The Tunneling In Participating Private Placement By Strong Shareholders

As one of the main means of financing by listed companies in China,private placement is now playing a very important role.The equity refinancing manner of listed companies in China mainly include rights issuance,new shares public offering and private equity placements,and they have become the three most commonly used means of equity refinancing for listed companies in China.However,in recent years,the trend of private placement is far more than two other means of equity refinancing to become the main means of financing for the listed companies.The start of Chinese private placement is relatively late,but it develops very fast.With the promulgation of the regulation on securities issuance of listed companies by China in 2006,it is the beginning of private placement,and take on the stage of our country's capital market.With the continuous development of Chinese economy,the development demand of China's capital market is also higher and higher.The demand for assets and money of listed companies has also increased greatly for their own development needs,so it is more necessary to refinance.Since its birth,the total amount of funds raising of private placement in China has been rising year after year,and it reached a new high in ten years in 2016.Private placement is developing with an irresistible force.Since its emergence in Chinese capital market,it has attracted much attention in academia.But in the past two years,the trend of private placement has weakened,leading to desire to explore the problems in private placement by scholars.Private placement is a non-public offering against public offering,referring to a kind of financing behavior of a listed company to issue shares to a certain number of issuing objects,which is similar to the foreign private placement financing.Research of private placement in China isn't mature and deep enough because it started late,while foreign private placement has a long history.Foreign scholars have already had a comprehensive understanding of the way of non-public offering of new shares.The scope of the study covers many aspects,such as the economic consequences of private placement,low price issuance of private placement,long term and short term market performance of private placement,and the purpose of private placement.The concept,tunneling,was first proposed by foreign scholars.This paper sampled the listed companies as study cases on the Shanghai and Shenzhen A share market from 2014 to 2016,to investigate appreciation rate in valuation of large shareholders injecting assets,and then study performance of listed companies before and after private placement,to explore tunneling in participating private placement by strong shareholders,then the following conclusions are drawn:(1)When the listed companies are in private equity placements for assets injection by large shareholders,there is a widespread phenomenon that the controlling shareholder manipulates injected assets to evaluate the value-added rate;(2)During the asset injection of private placement,the injection of assets from large shareholders is obviously inferior to the injection of assets from non-major shareholders,which verifies the conclusion that the majority shareholder carries on the benefit through the private placement;(3)Cash subscription is better than asset subscription in company performance.(4)The laws and regulations of our country are unable to completely prevent the tunneling between listed companies and large shareholders;(5)There are many leaks in the assets appraisal and evaluation mechanism of listed companies,which gives the large shareholders an opportunity to gain profits.