A Research Of The Perposes And Effects Of The Private Listed Companies’Accepting Bailout

This paper aims at researching the purposes and effects of the private listed companies’ accepting bailout.The structure of this paper can be described as four divided parts.Firstly,this paper summarizes the conception of the bailout by searching articles and other papers.And then this paper concludes where the bailout comes from,the practicing modes of the bailout and how the bailout was delivered to the private listed company.Moreover,this paper points out the differents between the bailout and other financing methods are the counter-cyclicality,the unregularity,the directivity and the comprehensiveness.Secondly,this paper takes the Palm Eco-Town Development listed company as an example,concluding both the purposes and effects in accepting bailout by analyzing its business environment,short-term market effect and the Z score mode.The purposes include meeting financial demand,widening financial sources,leading in long-term money and fixing business environment.Meanwhile,the effects include obtaining cash,earning strategic support,risen financial cost,bad short-term market effect and financial risks remaining.Thirdly,this paper assumes that the the bailout’s demanding of the rate of return,the unexpectedly delivered signal and the adverse selection could be blamed for those negative effects.Finally,to avoid such bad effects,this paper advice the Palm Eco-Town Development listed company to make better effort in managing,treat the bailout more objectively and accelerating changes in company governance.And for those who provides the bailout,this paper suggests them to enhance the level of risk sharing and keep the information transparent.