Researches Of Private Placements And Stock Returns In Pubic Equities

Private placements get a fast growth after the stock-reform. As a financing tool, private placements have the advantages of seasonal offering and debts. But does it can play the role in information certification and monitoring effects, propping effets, tunneling and entrenchment effects? The domestic and foreign researches focus on those effects. As the private placements get popular in China only several years, we can not gather the whole data for many cases. So many papers published only discussed the announcement effects of the fist announcement day, without the long-run return and performance. Fewer authors make research with the short-term performances. Fewer authors make research with long-term performances and return. Our goal is to make further studies with long-term return and performances.Private placements are divided into kinds by paying way, which is cash and assets.Placements paying by cash is always relative to monitoring effect orentrenchements effects.However,placements paying by assets is always relative to propping or tunneling effects.We make researches like these,but we also make comparations between placements and public issues.What's more,we make a process to find the matching firm which is the same industy ande the similar assets size with the private placements,and then compare the private placements with the matched firm.In order to finder whether the monitoring effects exists in private placements paying by cash and whether propping effects exist in cases paying by capital,we make researches om the long performances and return with the issuding charactores.We make researches closely by the topics:First,considering the pubilished papers make researches on private placements by using short return as depend variable,we do a researches about short,long return including the issuing-process return .We find the short return is not significantly relative to long-term return after issuing,but signifinally relative to the return between the first announcement and issuing announcement.Second, we make researches on long-term return and performances with charactors such as discounts,timing ,issuing size.But cases of different paying tools have different economical effects.So we devide the sample into two samples by the paying tools.In the chapter 5,we make research on the sample paying by cash only.We find that both the long-term return and the performance growth after issuing is negative to the discounts, which indicate that discounts is one of tools to entrenchments but not the beginning object for biggest shareholders.Because the ratio buyed by the biggest shareholders is positive to the performances relative to the same industry-year performance.However, discounts is positive relative to buying ratio by biggest shareholders and the return between the first announcement and issuing announcement,and the income because of lower issuing price (higher discounts) is more than 50% in the sample which the biggest shareholder stock holding ratio increase after issuing,ande lesser than 50% in the sample which the biggest shareholser'stock holding ratio decrease after issuing.So we get a inclusion that the discount is one tool for biggest stockholder which buy the stocks of private placements.We also get an inclusion that the lower stock holding level is the morst important factor for the biggest shareholder to buy more than the ratio they have holder in private placements.In the chapter six,we make researches on the sample paying by assets only.We make models about fake increase assets,putting down the price by behavior and timing market.We find the behaviors like up do not signicative impact to the long return and performance after issuing.But no matter the divided methods,all the samples indicate that the performance after issuing get bettet than before and better than the same industy-year performance.We make a inclusion that the assets inject with private placements is propping the firm's developments.This can be improved by the long return between the issuing announcemts to the resale unrestricted day for some cases.But we look indeep into the income from lower issuing price or higher discounts,we find this income is much more bigger than the buying-holding return in the resticted days.What's more,the ratio,which is the up income to the whole return from the issuing to the unrestricted day for the biggest shareholder, is almost 100%.So we make a inclusion that the discount is also a tools to entrenchments at the beginning.we also make comparations with the public issuing.We find both private placements and season equities offering has market timing, but the differences is :that the private placements price the stock at lower market prices and issue the stocks before the stocks index increase;the season equities offerings price the stocks at higher prices, issue the stocks before the stocks index decrease. So private placements can make sure the investor gross return, but maybe the season equities offerings issue at a higher price to finance more capital.The performances of private placements get growth after issuing, but decrease in the season equities offerings. We explain this by the different conditions of private placements and season equities offerings.Compared to the matching, non-financing companies, we find biggest shareholder or manager optimism exists in the bull markets, but propping effect exist in the economic risk era. From different resale restriction, we find longer resale restriction induces more monitoring effect and propping affect which dedicated by the sample of capital paying off.When resale restricted stocks get liquid, which will bring pressure to the prices, but more controlling shareholders purchase the stocks issuing by private placements to support the companies'growth. The performances of companies which restricted stocks get liquid have better performances than the companies without restricted stocks which liquid. This indicates that the stock reform can encourage the big shareholders to support the companies'developments.The main innovation and contribution:(1) First systematic study of short-run return and long-run return: attribute to the resent research of private placements; solve different results by different event window CAR; Select BHAR from the first announcement to issuing announcement as a median-term economic effect variable and study the relationship of insider trading, announcement effect, and long-run return,and use Heckman (1979) methods to certify"self-selection"problem of insider trading and announcement effect. In this chapter, we provide a new view of insider trading, announcement effect, and long-run return. The researcher which has high-frequency data can make further research on the behavior of insider trading.(2) As the view to effects such as monitoring effects, propping effects, entrenchment effects, we use both long-run return and long-term performance as a dependent variable in the regression and find significant entrenchment in sample of cash paying off, and entrenchment and propping effect in sample of capital paying off. What's more, we design a variable with discount-income and long-run return as the whole return get by the controlling shareholder. The variable has the same mathematics attributes to the adjusted-return by discount which is popular in the foreign researches. And we use the discount-income ratio of the whole return as the entrenchment effects. All of the up two variables are not used in the other published papers.(3) We select the matching companies by the method of industry-market size, which is less used in the research of China. And our research on comparation with the matching companies has provided a new view of the research in this field.