Government Regulation And Seasoned Equity Offerings Efficiency

Underperformance of Seasoned Equity Offering(SEO) has been the attention focus of academic circles from the 90's of twenty centuries and it has been explained by researchers on the basis of Earning management,Free Cash Flow Hypothesis,Asymmetry Information. Considering the fact that listed companies have to meet the governmental rules under market background of China,this article lays research on companies of rights offering and goes down the thread of policie→characters of companies action→performance of SEO,and then tries to find new explanations for underperformance of SEO from the perspective of government supervision.By partitioning off pre-SEO and pro-SEO regulations to eight aspects:earning demand, interval,industry policy,subscribing rate for dominant stakeholders,issuing rate,corporate governance structure,dividend policy and investment policy,this paper analysis the effect of rules on companies actions and tests those actions' influence on SEO performance by referring to OLS Models,Logistic Models,parameter tests.All of the empirical results support alternation of government regulation policy in view of enterprises performance,that is to say,the higher earning threshold is,the more quickly performance drops.Industries supported by policies have a slow progress and it is hard for them to be financed by credit.Companies with high issue rate have a worse performance.Distinctive differences exist in performance between enterprises with an issue rate of more than 30%and those of fewer than 30%.Underperformance can be lessened if dominant stakeholders subscript shares,while no marked effect concerning shares taken by goods or not has been observed.All investment alternations lead to performance drop no matter what cause it.Cash dividend before rights offering has positive effect on performance of the same year of offering,and cash dividend is positively relative to performance in every year after SEO. Furthermore,those companies that pay cash dividend have better performance.Affiliated business and entrenchment effect by dominant stakeholders have negative effect on corporations. Performance of those re-offerings with an interval of more than 1 year outgoes those with an interval of 1 year.By testing the market reaction of public enforcement after SEO,the paper comes to the conclusion that enforcement has no effect,and corporations that fall in deregulation act have certain characteristics,which has a close relationship with rules of offerings.