| After the implementation of "the listed Corporation refinancing management"in 2006,Private Placement① has become an important tool for many listedcompanies to raise funds;the number of asset transactions through private placement increases rapidly.In the PP to buy assets,some listedcompanies will enter intoa written agreement to guarantee the target’sprofit of the next few years.The profit guarantee does not exist in other countries,such as Europe and the United States,but why does it exist in China?What are the key factors that affect the profit guarantee in PP’?There are a number of scholars and practitioners who have questions on too high profit quantity,then,what determine the profit quantity?What about the realization of the profit guarantee?How the market reaction of profit guarantee?Whether the"tunnelling" exist in Profit guarantee or not?Whether the profit guarantee will affect the PP discount?In this paper,we will analyze the above four questions one by one.In order to answer the first question,that is,the key influencing factors of the profit guarantee in PP.From the perspectives of information asymmetry and the threat of control power transfer,the paper uses the static game theory,and then carries out the empirical test by using the data collected by hand.The conclusions are as follows:1.Information asymmetry has a significantly positive correlation with profit guarantee,and has a significantly positive correlation with the amount of profit guarantee,and has a significantly positive correlation with guarantee incentives,and has a significantly positive correlation with the use of cash compensation2.When CR1 and CR6 are used to indicate the threat of control transfer,the results show that the threat of control right transfer is not significantly related to the profit guarantee in PP.3.In this paper,we use the instrumental variable method and the independent variable substitution for information asymmetry(ASY),to retest the above results,and find that the results are basically consistent4.Taking into account the policy effect,the results are consistent,but CR1 is significantly related to the profit guarantee and profit incentivesin PP.These results answer the first question,that is,information asymmetry is an important factor that affects the profit guarantee,and the impact of the threat of the transfer of control is not significantIn order to answer the second question,that is,the market reaction of the profit guarantee in PP.From the perspectives of signal transmission and commitment mechanism,the paper makes a research on the first and second market reactions of the profit guarantee,and makesconclusions as follows:1.The paper uses the ratio of the plan price compared with the benchmark price as the primary market reaction,and the empirical results are as follows:Whether there is a profit guarantee is significantly positive correlation with the ratio of the plan price compared with the benchmark priceat 0.001 level,and the quantity of profit guarantee is alsosignificantly positive correlation withthe ratio of the plan price compared with the benchmark priceat 0.001 level.That is,the profit guarantee has brought a positive first market reaction2.The paper uses the excess return rate(AR)and the cumulative abnormal return rate of each time window as the proxyvariableof second market reaction,such as CAR[-1＋1],CAR[-2+2]and CAR[-5+5]。The empirical results are as follows:Whether there is a profit guarantee is significantly positive correlation with AR,CAR[-1+1],CAR[-2+2]and CAR[-5+5]at 0.001 level,and the quantity of profit guarantee is also significantly positive correlation with AR,CAR[-1+1],CAR[-2+2]and CAR[-5+5]at 0.001 level.That is,the profit guarantee has brought a positive second market reactionThese results answer the second question;the profit guarantee in PP brings positive first and secondary market reactions,indicating that profit guarantee in PPis not a commitment mechanism,but plays an important role in signal transmissionIn order to answer the third question,namely whether does tunnelingexist during the profit guarantee in PP.The paper uses related transaction as a proxy variable of tunneling,to test the tunneling during the profit guarantee in PP,and to test whether the level of governance will ease the transfer of benefits,the conclusions are as follows:1.In related transactions,the less likely the listedcompanies to require the target to make a profit guarantee,the lower the quantity of profit guarantee,whichverify the existence of the "tunneling" behavior during the profit guarantee in PP indirectly.2.Large shareholders mainly achieve the goal of "tunneling"through related transactions.In addition,the relationship between the top ten shareholders,the proportion of institutional owners,and power balance with shareholderscan directly or indirectly alleviate the "tunneling".The above results answer the third question,namely tunnelingexists during the profit guarantee in PP,and governance level(the relationship between the top ten shareholders,the proportion of institutional owners,and power balance with shareholders)can effectively alleviate the "tunneling".In order to answer the fourth question,namely the relationship between the profit guaranteeand PP discount.The paper uses the sample from year 2006 to year 2015,to study the relationship between SEO ①purpose,transaction premium rate,profit guarantee and PP discount.As for the SEO purpose,the whole sample is divided into asset transactions and no asset transactions,no asset transactions is divided into project financing and supplement liquidity,the conclusions are as follows:1.In the whole sample,there is a significant positive correlation between asset transactions and SEO discount.2.In the no asset transactions sample(subsample 1),there is a significant negative correlation between project financing and SEO discount.3.In the asset transactions sample(subsample 2),there is a significant negative correlation between transaction premium rate and SEO discount.4.In the asset transactions sample(subsample 2),there is not a significant correlation between profit guarantee and SEO discount.These results answer fourth question,that is,the SEO purpose and the transaction premium rate are also important factorswhichimpact the SEO discount,but the profit guarantee has no significant effect on PP discountOverall,the paper includes seven chapters;the main contents of each chapter are as followsIn the first chapter,the problem is put forward.By introducing the related research background,this paper draws out the research object,and puts forward the research questions,and then forms the research ideas and research framework of this paper.The second chapter includes literature review and theoretical analysis.The study on profit guarantee is still very short.From the perspectives of information asymmetry,tunneling,signal transmission theory,commitment mechanism,etc.The paper makes literature review and theoretical analysison each partThe third chapter analyzes the institutional background.First of all,the paper introduces the "refinancing policy";secondly,we analyze the regulation "major asset restructuring of listedcompaniesIn the fourth chapter,we study the relationship between the information asymmetry,the transfer of control rights and the profit guarantee in PP,and verify the robustness of the results by instrumental variables and policy effectsThe fifth chapter studies the first and second market reactions of profit guarantee in PP using the signal transmission theory and the commitment mechanism theory.On the basis of the above researches,the sixth chapterputs forward some further research problems,including the study of tunneling during profit guarantee in PP,that is,the impact of related transactions on profit guarantee in PP.At the same time,this chapter also studies the relationship between the profit guarantee and the SEO discount.In the seventh chapter,we summarize the results of the fourth,fifth and sixth chapters.This paper includes research conclusions,policy recommendations and implications.The paper enriches and expandes the existing research field,including the impact factors of the profit guarantee in PP,the market reactions of profit guarantee in PP,the tunneling during profit guarantee in PP,and the PP discount.Specifically,the marginal contributions of this paper are as followsFirst,the paper firstlystudies of the impactfactors of the profit guarantee in PP.Currently;there is little literature on related issues.Gao,Sun and Hu(2010)studies whether the compensation arrangements will protect the interests of small and medium-sized investors,and finds that share compensationis able to better protect small investors than cashcompensation.Lv and Han(2014)study mergers and acquisitionsinShenzhen stock market from year 2011 to year 3013,and find that the profit guaranteecan significantly improve the earnings of the shareholders of the acquirers,and significantly enhance the synergy of mergers and acquisitions.Zhang(2012)finds that core business change oflisted companies,related transactions,and transaction premium rate will significantly affect the profit guarantee in PP.Wu and Zheng(2006)studies the consideration ratio between non-tradable shareholders and tradable shareholders,and finds that companies with profit guatantee have lower consideration ratio.Liu,Yang and Ma(2011)find that companies with profit guarantee in split share reform will improve performance through the earnings management,so as to achieve the goal of profit guarantee.The above researches on the profit guarantee(performance commitment)are either from the perspective of the listedcompanies,or from the perspective of the split share reform.There is very little literature from the perspective of the non-listed companySecond,this paper studies the relevant issues of profit guarantee in PP from the perspective of information asymmetry and control of the transferfor the first time.Currently,profit guarantee in M&A contractmainly explainby ex post information asymmetry theory,the acquirer can incentive acquiree through profit guarantee,andencourage acquiree to achieve the expected goal and reduce the moral hazard(Brav and Gompers,2003).The premise of these theories is that the profit guarantee comes from the information asymmetry between the acquirer and acquiree(Karpoff et al.,2013)Third,most literatures only study the secondary market reaction of profit guarantee in PP,but this paper will study bothe the first and the secondary market reactions,and gives explaination from the signal transmission theory.At present,many scholars at home and abroad have conducted research on the secondary market reaction of PP(Altinkilic,Hansen,2003;Corwin,2003).Kong and Fu(2005)find that the secondary market has a negative reaction to SEO;some scholars also conclude that the secondary market has significantly positive reaction on the holistic listing of PP,and the reaction is higher than other tpyes of PP(Zhang,2007).All in all,scholars only focus on the secondary market reaction on issue day,and seldom concern primary market reaction and announcement day’s reaction.In this paper,we use the primary and secondary reaction of profit guarantee in PP,to test the previous signal transmission theory and commitment mechanism theory.Fourth,this paper first studies the tunneling of profit guarantee in PP.Many scholars at home and abroad have studied the tunneling in various fields(Mcconnell Denis,2003).Many scholars find that tunneling of major shareholders is very subtle,sometimes through related transaction(Johnson et al,2000;Chang,2003;Bertrand and mullainathan,2002;BAE et al,2002),and sometimes through the asset appraisal(Zhang and Guo,2008;Zhenget al.,2008),and sometimes through manipulating the listed company disclosure of major information(Wu and Wu,2010),but at present,there are few scholars to study the tunneling of profit guarantee in PP.This paper studies the tunneling of profit guarantee in PP,and concludes that during the related transactions,the less likely to make profit guarantee in PP,the lower the quantity of profit guarantee.Fifth,this paper firstly explains the PP discount rate from the perspectives of the PP purpose,transaction premium rate and profit guarantee.PP discount is a hot topic discussed by scholars at home and abroad.At present,there have been some studies on the SEO discount,and concludes some factors that affect the PP discount,such as the offerings’ scale,relative size,listed companies’ size,book to market ratio,proportion of shareholders’ subscription,whether large shareholders participate in the subscription,the way of major shareholders to subscribe,institutional investors shareholding ratio,number of securities analysts,investors’ heterogeneity(analysts predict differences)(Mola and Loughran,2004;Jiao and Chemmanur,2011;Xu,2009;Zhang and Li,2008).But there is less research on the relationship between the profit guarantee,the PP purpose,the premium rate and the PP discount.There are differences between PP purposes,which mainly include the project financing,supplement fluidity,the replacement of assets restructuring,the group holistic listing,shell resource reorganization,financing supporting,leveraged buyouts other assets,actual control of assets injection,the introduction of strategic investors et alAmong them,the project financing and supplementary liquidity does not involve asset transactions,while the other seven types of purposes do involve.Whether involve asset transactions will affect announcement day’s market reaction and PP price,which led to different PP discount.Similarly,in the sample does not involve the assets of the transaction,the project financing and supplement fluidity will lead to different market reaction and PP price(Kong and Fu,2005),namely the PP discount will be different.In the sample of asset transactions,asset transaction premium rate and profit guarantee will affect the PP price and market reaction,thereby affecting the PP discount. |
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