Influence Of Private Placement On Stock Price

Private Placement is becoming the primary seasoned equity offerings(SEO) in China, and get more and more attention from both practice and academic world since the China Securities Regulatory Commission (CSRC) approve private placement in 2006. Foreign researchers found that the period around private placement presents strong potentially incentives to change a firm's disclosure policy. However, there are little literature explore whether the firms would choose different information disclosure policy facing different types of investors to influence the stock price in the Chinese specific market background. In this paper, based on the former research in and out of China, we take information disclosure as the mediator, and built a framework and model which covers the action of private placement, the information disclosure, and the stock price. So in our model, it contains the incentives of disclosure, the strategy of disclosure and the effects of disclosure.Taking firms which finished private placement during 2006-2010 as sample(301), we examine corporate disclosure activity around private offerings and its relationship to stock price. During the data processing, we mainly used factor analysis, analysis of variances, multiple linear regression and logistic regression to verify hypotheses in the model. After quantitative analysis and theoretical exploration, some important conclusions are as bellow:(1) Different types of private placement will cause different stock price effect. If major stockholders or related affiliated parties involve in the offerings, firms will experience less price increase compare with the offerings is just available for institutional investors 20 days before the announcement. While in the 20 days after the announcement the gap is not signature.(2) Different types of private placement will cause different disclosure policy. When major stockholders or related affiliated parties involve in the offerings, the firms prefer disclose bad news before the announcement, while good news after the announcement. When the offerings is just for institutional investors, the result is just the opposite.(3) The disclosure policy is the mediator. Around the offerings, the listed company will take different disclosure policy as the mediator to affect stock price.