Empirical Test Of Market Timing Effect On Seasoned Equity Offerings Under The Regulation Policies

In recent years,with the development and enrichment of behavior finance theory, many basic assumptions in traditional finance such as rational investors and effective market are questioned by more and more people.Many domestic and foreign scholars began to research the impact of capital market environment on the financing behavior from the perspective of irrational investors and inefficient market.Their studies found that the market timing effect really exists in corporate finance activities.This research is especially important in Chinese capital market,because the development history of Chinese capital market is quite short,so market system is not perfect.The supervision department has long promulgated many supervision laws and regulations on SEO to regulate the refinancing behaviors of Chinese listed companies.To the policy, market timing is restricted by the refinancing policy from the government.So that, the effect of market condition on corporate financing depends on market price and policy.In view of this,this paper attempts to take the equity refinancing of Chinese listed companies as its study object,combining with the regulation policies in securities market,and examine the market timing effect on SEO based on the research methods of Alti (2006).This paper includes six chapters.Chapter 1 (Review) introduces a research background,contents and significance,the framework of this paper.Chapter 2 introduces the policies evolution in SEO of Chinese listed companies,and summarize the reason of securities supervision.Chapter 3 includes literature review concerning the theoretical foundation and empirical research findings of Market Timing.Chapter 4 is about the research design.It details description of the data sources and sample selection,the definition and measurement of research variables,research supposition, research procedures.Chapter 5 is description and analysis of the empirical results.At first it tests the market timing effect based on the entire samples through the analysis of variance and multiple regression,and then based on the independent samples of share allotment and additional equity offer.Chapter 6 is the conclusion of the study and enlightenment in this paper,and puts forward the limitations of this study,makes recommendations on the improvement direction of follow-up studies.The empirical results show that the market timing effect is very significant in seasoned equity offerings,and Market Timing is highly correlated with the issuing size of SEO.This effect is not caused by the investment demand,also not stem from the motivation to adjust financial leverage.According to our analysis on regulation policies,the effects of market timing could be divided into two parts,one was based on price,and the other was based on regulation policies,the latter of which account for 5.3% in share allotment and 32% in additional equity offer.That's mainly because regulation policy has limited the companies' market timing ability greatly.We also found that regulation policy has significant negative correlation with issuing size of SEO.Whether the policies evolution in share allotment or additional equity offer,it has a substantial impact on the issuing size of SEO.