The Study On Directional Add-Issuance And Its Influences In The Era After Split Share Reform

In the era after split share reform, an important change of listed company financing is that directional add-issuance has become the mainstream method of company refinancing. Because directional add-issuance has many advantages, it is favored by listed company and investors. Directional add-issuance can introduce strategic investors for company, absorb big shareholder's high quality assets and easy to realize overall listing etc.This article uses economic analysis method, event study method and factor analysis method to study directional add-issuance effect on shareholder interest, stock price and company performance.First, directional add-issuance will affect the interests of stakeholders such as big shareholder, minority shareholders and institutional investors, especially for big shareholder. Pre and post directional add-issuance big shareholder wealth change depends on whether or not big shareholder buys new directional add-issuance stock. The stock price before directional add-issuance and new directional add-issuance stock price become important factors which decide big shareholder's wealth.Second, this article uses event study method and 41 directional add-issuance companies exchanging data in 2006 to study the trend of stock price. It shows that cumulative abnormal returns are positive and differed significantly from zero during the event window. The stock market and investors have high expectation on directional add-issuance. They think it is a good thing. And we also find investors prefer directional add-issuance which issue to institutional investors to which issue to controlling shareholder.Finally this article uses factor analysis method to study different types of directional add-issuance's different influences on company's performance. Directional issuing new stock to controlling shareholder usually can make company absorbs high quality assets, realize overall listing and reduce horizontal competition or related trade. All the benefits bring the rapid improvement of company's performance. Directional add-issuance of which issue to institutional investors doesn't have significantly influences on company's performance in short term.