The Change Of Committed Investment Projects Of Listed Companies Refinancing And Its Effect On Company Performance

In recent years, the listed companies in China are tend to allot shares and add shares non-reasonably, meanwhile, the change of committed investment projects in large scale, and this tendency becomes more and more stronger.This paper aims at such a realistic issue and analyzes the present status of change of committed investment projects after refinancing of listed company by taking 681 listed companies which had allotment and added share issue in Shanghai and Shenzhen stock exchanges in China from 1998 to 2004 as the sample. The characteristics of change of committed investment are found as follow: (1)the change has the catholicity; (2)it is affected by the market atmosphere and pursues hot projects blindly; (3)it appears most in local projects and often be with large amount of money.After the characteristics of change are concluded, the paper analyzes the reasons of change, concrete reasons revealed by companies as objective factor influence and subjective benefit drive are generalized. But by the further study, deep system reasons of change are detected. On the other side, it is discovered by empirical evidence that: (1)listed companies which raise money when stock market is hot change committed investment projects more easily than those raising money from cold market;(2)Committed investment projects are more,and the projects are more likely to be changed;(3)And the probability of changes is inversely related to Tobin's Q,the size of the company and the asset fluidity before refinancing.And after that, this paper takes an empirical research into the effect of changing committed investment projects of listed company equity refinance on company performance on the 174 listed companies which change committed investment projects in 2000, 2001 and 2002 after having allotment or adding share issue in Shanghai and Shenzhen stock exchanges in China from 1998 to 2002. By comparing the annual performance of change company with mate company during three years before change, that year of change and three years after change and comparing the degree of difference before and after change, the results show that listed company with bad performance is very likely to change committed investment projects, but the performance is worse after change and downtrend in long term and the performance difference with the mate company also expands.On the basis of the above analysis, two aspect suggestions about capital use and management after equity refinancing are brought forward: the management structure of listed companies should be perfected, and the intendance of the stock market should be strengthened.The research results of this paper provide related theories, proof and suggestions for listed companies to use refinancing capital to promote company performance more reasonably.