Study On Effect Of Changes In Investment Project Of Equity Financing Fund On Firm's Performance And Stock Price In Chinese Listed Companies

That Chinese listed companies frequently change the invstment projects of equity financing funds has become an outstanding problem in China stock market, which has gradually aroused wide attention of regulatory institutions, investors and academic circles. Systematically studying the effect of changes in investment projects of equity financing funds on stock price volatility and firm's performance has significant meanings of theories and practices to standardize the behaviors of equity financing and equity financing funds investment of Chinese listed companies, to improve listed companies'quality and operational efficiency, to strengthen the Chinese stock market risk management and control, and even to guarantee Chinese stock market's development in a healthy, steady and constant way.This paper is based on deep analysis of the equity financing behavioral characteristics of Chinese listed companies, taking equity financing companies as samples, using data for the period 1996 to 2006, as well as appropriate econometric model and method, empirically and respectively studies the effect of changes in investment projects of IPO financing funds and refinancing funds on the company stock price volatility and performance in Chinese listed companies. The research conclusions of this paper, in a certain degree, can explain such phenomenon as long-term and poor operating performance of Chinese listed companies and the remarkable drop of companies'profit ability after equity financing.Specifically, the paper's main research and innovation is reflected in the following aspects:①Using descriptive statistics, the paper analyzes equity financing's behavior characteristics from the aspects of quantity, financing size, industry characteristics, main characteristics and timing of financing options. The research results show that timing effect of equity financing is obvious, industry distribution is seriously imbalanced. The proportion of large state-owned shares is very large, which creates the situation of one stock's dominance, so the governance structure needs to be improved. Chinese listed companies have significant equity financing preference, but they change the invstment projects of funds after financing large amount in stock market with various excuses, which has become an outstanding problem in Chinese stock market.②Taking IPO companies in the main board market of Chinese A share during the period from 16th December 1996 to 15th June 2006 for sample, using appropriate econometric model and method, this paper studies the effect of changes in investment projects of IPO financing funds on the company stcok price volatility and performance in Chinese listed companies empirically. The research results show that the effect of changes in investment projects of IPO financing funds on the stock price volatility in Chinese listed companies is not significant, the long-term operating performance of listed companies will decrease in the investment projects change ratio of IPO financing funds, and the long-term operating performance of listed companies will decrease remarkably when they invest the IPO financing funds into stock market or bonds.③Taking refinancing companies in the main board market of Chinese A share during the period from 16th December 1996 to 15th June 2006 for sample, using appropriate econometric model and method, this paper explore the effect of changes in invstment projects of refinancing funds on the company stcok price volatility and performance in Chinese listed companies. The research results show that the effect of changes in investment projects of refinancing funds on the stock price volatility in Chinese listed companies is not significant, and the long-term operating performance of listed companies will decrease in the investment projects change ratio of refinancing funds.