The Empirical Study On Announcement Effect Of Private Placement In China

Along with phase's success of non-tradable shares reform was achieved, and the financing function of the stock market was restored, on May 8th,2006 policy about listed company's security issuance was published, which symbolized that private placement was introduced into China. Hua Lian Hypermarket (600361) became the first listed company which had accomplished private placement. From then on, because of low request and easy operation, private placement became the most popular refinancing means of listed company, and it is being used by more and more listed companies, playing an important role in the capital market, simultaneously it also has become one of the hotspots pursued by investors.Announcement and implementation of private placement not only affects price performances of single stock, but also affects the resources optimization and the fund disposition in the entire stock market, which has been taken more seriously by security supervisory department and investors. There have been many scholars Who launched the research in system, way of price and investment value of private placement stock, seldom do empirical research on the market reaction to private placement. Moreover, along with the stock market's development, more and more different types of private placements based on different goals have appeared, which have affected the intrinsic value and fluctuation of stock price. In this case, it is more meaningful to conduct the classified research with more sufficient data.Choosing 569 listed corporations involved in the private placement as the sample, this paper analyzes the fluctuations of cumulative abnormal returns and abnormal returns resulted by the announcement effect of the placement with the methodology of "Event Study". It is proved that private placement caused significant positive abnormal returns and cumulative abnormal returns on announcement days. Statistics test indicates that there is significant difference between the announcement effects caused by the placements with different issue targets. The effects of the companies whose issue targets include major shareholders are more significant. Meanwhile, the investors are not that sensitive to what the major shareholders pay for the shares they subscribe. At last, according to research conclusions, this paper gives some explanation to help investors understand market response to private placement.provides the reference for investor's investment decision, and gives some suggestions to the security supervisory department in order to make private placement more effective.