The Stock Price Effect Of Private Placement

Since 2006,the private placement has developed rapidly and the entire fixed-price market has exploded in China.The large-scale lifting of the ban on shares has brought a huge impact on China's stock market.At the same time,some major shareholders of listed companies use the gaps of laws and regulations to use the private placement for profit transfer.The new refinancing regulations and the new reduction regulations in 2017 have imposed restrictions on the issuance and lifting of private placements,reducing the number of irregularities and rapidly cooling the market for private placements.It is very meaningful to study the stock price effect of the private placement.On the one hand,it can analyze the stock price performance of listed companies after the private placement of stocks for the private placement investors and the secondary market investors.On the other hand,it can present the private placement market performance after the new regulations.This paper adopts China's 2006-2017 a-share private placement data,excluding the sample companies that have issued multiple private placements within three years and the sample companies that have had other major events during the window of the private placement event,and the final valid sample is 655.The event research method uses a one-variable t-test and a multiple linear regression model to analyze the impact of private placement on stock prices.This paper uses the cumulative excess return rate of the initial period announcement to measure the short-term stock price effect of the increase,and analyzes the short-term stock price effect through the full-sample t-test and the part of sample t-test.The long-term cumulative excess return rate is a measure of the long-term stock price effect,and the multiple linear regression model is used to analyze the influencing factors of the stock price effect.The indicators closely related to the private placement are selected as the explanatory variables in the regression model:the issue discount rate,the financing scale,and the target of the subscription;and other indicators related to the stock price performance are selected as the control variables:the company's financial situation,the company's stock price performance,and the whole The volatility of the stock market.In this paper,three regression models are used to analyze the influencing factors of the short-term stock price effect of the private placement and the influencing factors of the long-term stock price effect and the correlation between the short-term and long-term stock price effects.Combining the results of the t-test with the results of the stock-price regression model,the conclusions are summarized as follows:(1)Before the new refinancing and reducing regulations,the short-term stock price effect of the private placement is significantly positive;after the new refinancing and reducing regulations,the volatility of the share price effect during the window period eased,and the short-term stock price effect of the private placement is negative.(2)When the major shareholder participates in the private placement,the short-term stock price effect of the private placement will occur in advance,the fluctuation effect of the stock price effect will be more severe,and the trading day with excess return before and after the announcement date of the initial plan will be added.However,the participation of major shareholders did not have a significant impact on the cumulative value of the short-term excess returns during the private placement window.(3)The larger the financing scale,the higher the investment management capability and risk control ability of the listed company.The more doubts the short-term investors have about whether the company can manage the private placement projects,the smaller the short-term excess return rate.Financing the influence of scale on the short-term stock price effect is also related to the size of the company itself.The size of mainboard listed companies is larger than that of the small and medium-sized listed companies.The financing scale of the small and medium-sized listed companies has a greater impact on the short-term stock price effect than the main board.(4)The long-term stock price effect of the private placement is significantly positive.The short-term stock price effect has a negative correlation with the three-year long-term stock price effect.The higher the short-term cumulative excess return rate,the three-year long period after the announcement the lower the excess return rate.When secondary market investors select stocks,they should consider whether the stock is in restricted period,whether the short-term market of the private placement is overheated,and comprehensively analyze the stock price volatility of listed stocks and the long-term investment value of listed companies.