An Empirical Research On Underperformance Of Listed Companies Conducting Seasoned Equity Offering

Since the security market of our country has been established in 1990, with the development for twenty years, it has become the most important refinancing platform of Chinese listed companies. Chinese listed companies have a strong preference to equity refinancing for a long time. In recent years, with the transformation of equity refinancing policy in our country, Seasoned Equity Offering gradually replace Rights Offering becoming the first choice of equity refinancing. Whether or not Seasoned Equity Offering can bring a good performance to listed companies, not only concerns the interest of investors, but also determines the efficiency of security market that allocates social resources in our country.For now, domestic and foreign scholars has conducted extensive research on the underperformance of listed companies conducting Seasoned Equity Offering, however, due to the establishment and development degree of our security market, foreign scholars did not select listed companies of our country that conducting Seasoned Equity Offering as research samples. In domestic scholars' research on the underperformance of listed companies that conducting Seasoned Equity Offering, the underperformance of listed companies that conducting Seasoned Public Offering or Seasoned Private Offering had been studied independently in general, there is no comparative study on these two types of Seasoned Equity Offering. For this reason, this paper selects Chinese listed companies that carried out Seasoned Equity Offering refinancing under the latest policy of our country as research samples, exploring how about the Seasoned Equity Offering effect on the corporate performance of Chinese listed companies and the differences between the performances of listed companies that conducting Seasoned Public Offering and Seasoned Private Offering at the same time. This also is the research innovation of this thesis.This article started from the background that Seasoned Equity Offering has been dominated the leading position in listed companies' equity refinancing of our country for recent years, analyzed the Seasoned Equity Offering and corporate performance from the theoretical point of view at first. Soon after, this paper introduced the development and current status that listed companies take Seasoned Equity Offering refinancing in our security market. On the basic of theoretical and current status analysis, this paper selected 135 listed companies on Shanghai stock exchange and Shenzhen stock exchange that carried out Seasoned Equity Offering refinancing in 2007 as investigative sample, investigated the influence of Seasoned Equity Offering to the corporate financial performance by empirical tests. Finally, the paper made some policy recommendations on the basic of summarize and analyze the results of empirical tests. This article includes the following five parts:The first part introduces the background and significances of this study, the results of domestic and foreign relevant research, the research ideas and methods, and the innovations and lacks of this research.The second part discusses the conceptions that this article involves, related basic theories, corporate performance and its evaluation methods.The third part introduces the development and current status of Seasoned Equity Offering in the security market of China in detail.The fourth part takes some empirical tests on the performance of research samples by using SPSS statistical software, and analyzes the results of empirical tests soon after.The fifth part summarizes the results of empirical research and makes some policy recommendations in order to improve the corporate performance of listed companies that conducting Seasoned Equity Offering.The results of empirical research indicate that within the two years after the listed companied carried out Seasoned Equity Offering refinancing, the financial performance of sample companies showed a remarkable decline compared with the performance before conducting Seasoned Equity Offering, the refinancing size, the free cash flow that the corporate hold in the preceding year of Seasoned Equity Offering and the performance growth, each of them have a significant negative pertinence relationship with the corporate financial performance after the Seasoned Equity Offering. Further more, the result of empirical test also indicates that the financial performance of listed companies which carried out Seasoned Private Offering is little better than the listed companies' financial performance that carried out Seasoned Public Offering; this shows that the asymmetric information and principal-agent problems are the main reasons for the underperformance of listed companies conducting Seasoned Equity Offering in our country.