The Effect Of Private Placement With Major Shareholder Participation On Asset Mispricing

Asset mispricing is one of the anomalies in the financial market.As a typical emerging market,China's capital market price volatility increases,asset mispricing is becoming increasingly serious.The deviation of stock price from its intrinsic value is affected by the external capital market,and may also be caused by the internal contradictions and interest conflicts of the company.However,there are few literatures on the research from the perspective of internal governance of the company.According to the theory of information asymmetry,the theory of limited rationality of behavioral finance investors and the theory of principal-agent,private placement is a tool for large shareholders to carry out market value management.Large shareholders use private placement for earnings management to whitewash operating performance and maximize shareholders' interests.This paper uses the method of intermediary effect test to study the intermediary effect of earnings management on the effect of private placement on asset mispricing.This paper adopts literature review and empirical analysis.Firstly,this paper expounds the background and significance of the research.Secondly,on the basis of asymmetrical information theory and agency problems,this paper analyzes the intermediary effect of earnings management between private placement and asset mispricing,and puts forward the research hypothesis of this paper.Thirdly,this paper selects the listed companies that have implemented private placement in China's A-share market in 2015-2019 as the research sample.Three regression models are established to analyze whether the participation of major shareholders will aggravate asset mispricing and the role of earnings management in the process of asset mispricing.The results show that: first,the participation of large shareholders in private placement will aggravate asset mispricing;secondly,the major shareholders' participation in targeted issuance is positively related to earnings manipulation.Earnings management is a means for listed companies to maximize their interests by intentionally intervening in financial statements.;thirdly,earnings management played a part of intermediary role between the targeted issuance and asset mispricing in which the major shareholders participated.