The Impact Of Private Placement On The Performance Of Listed Companies

Since the China’s capital market kept continuing, the refinancing demand of thelisted companies has been growing. Although Equity Private Placement is a new wayof equity refinancing and has occurred since May8th,2006, it has become the mostpopular and important one and has been accepted by most listed companies rapidly.In the capital markets abroad, private placement showed up early and becamemature. The public and scholars have also done the study extensively and deeply. Onthe contrary, private placement has just happened in China’s A-share market for shortyears. That’s why our study and investigation are not as systematic as in foreigncountries. We find that there are not enough studies working on the operationperformance. Therefore, the study on how the private placement impact on theoperation performance of listed companies should be considered seriously, which willbe very significant.In this paper, we mainly do the empirical research. After introducing the researchbackground and significance, we review the equity refinancing state in China’sA-share market since2006. We choose the listed companies, which implemented theequity private placement from2006to2009, with the original data from2005to2010,as our sample. This paper tries to analyze the impact not only on both the benefit andthe efficiency, but also the relation between those.During the study of the impact on the benefit, we use the factor analysis andextract4common factors from10selected indicators. Then we calculate eachsample’s performance score via the factor analysis model we construct. We find that70%of the sample is with an increased or unchanged performance. However, thisimpact is not so significant in statistic. We use the DEA to study the impact on theefficiency and find out that the direction of Technical Efficiency goes different waysand few samples can reach the best condition.Through this empirical study, we find that the impact of equity private placementon the benefit and efficiency is basically the same direction. However, the changes ofefficiency are more sensitive, and the changes of benefit are more stable.