The Role Of Institutional Investors In The Private Placement Of GUANGZHOUYUETAI GROUP Co.,Ltd.

Directional issuance is the preferred method for equity refinancing in China’s securities market.Financial institutions such as funds,brokers and insurance companies are important investment strengths in the capital market and one of the main targets of domestic directional bursts.Regarding the corporate governance role of institutional investors,domestic and foreign scholars have not yet reached a unified opinion.Although scholars represented by Wruck(1989)believe that institutional investors’ participation in private placement can play an active role in improving long-term business performance,scholars represented by Graves and Waddock(1990)consider that the speculative nature of institutional investors determines that they do not have sufficient supervisory motivation and ability.Combined with the actual situation of the capital market,although some institutional investors can really participate in corporate governance by virtue of their own advantages and play an active role in supervision,it is not uncommon for large shareholders to use private placement as a tool for profit transfer.This shows that there are still institutional investors who have not played an effective supervisory role after participating in the private placement,and the interests of small and medium shareholders are constantly being occupied by major shareholders.The latter is also in line with the "strategic alliance hypothesis" proposed by Pound(1988).When the interests of institutional investors and major shareholders of the company tend to be consistent,and both expect to receive excess returns in the short term,the two will form a strategic alliance to jointly harm the interests of small and medium investors.Based on the above background,this paper sorts out the related literatures on the role of institutional investors and major shareholders in the private placement,and reviews the principal-agent theory,the theory of large shareholders’ short-selling theory,the management defense theory,and the institutional governance theory of institutional investors.In the private placement,shareholders will use their own control power to seek private benefits.At the same time,the company’s management will prevent the newly added institutional investors from interfering with the company’s decision-making and prefer to sell the shares to the passive investors.The essence of the influence is profit-seeking.Therefore,when the interests are at the same time,the two are more likely to form alliances and jointly occupy the interests of the minority shareholders.In order to specifically study the role of institutional investors in the private placement,this paper takes case analysis as a research method,and conducts a series of studies on the example of the private placement of controlling shareholders and institutional investors.First of all,this paper analyzes the circumstances under which institutional investors and controlling shareholders collude.Secondly,relying on specific cases,this paper analyzes the respective motives of institutional investors and major shareholders,the specific means of collusion,and the outcome of the game after the collusion.Finally,this paper summarizes the risks that institutional investors and major shareholders may collude in the private placement in the case,and proposes the risk response measures for small and medium shareholders and regulators.This paper attempts to provide a reference for small and medium-sized shareholders to reasonably avoid investment risks during the period of fixed-income,improve the supervision and improve the policy of private placement,and contribute to the further research of related topics.