An Empirical Study On Agent Behavior Of Large Shareholders On Private Placement In China’s Listed Companies

Since the shareholder structure reform, the private placement has gradually becomeone of the important ways of equity refinancing in China’s securities market. For listedcompanies, the private placement supports the development and growth of the company’sfunding; for investors, the private placement provide them with good investmentopportunities. However, as a new mode of financing, the related laws and regulations aboutthe private placement are not perfect, the pricing ex-date is not clear, and the authority ofthe board is too large, so it makes possible that the large shareholders transform benefits byundercutting prices or issuing additional defective assets, so it is urgent and important forinvestors to analyze and identify the private placement of listed companies.The thesis uses event study and statistical test, selecting listed companies on the MainBoard of Shenzhen and Shanghai as samples from2008to2011that private placementshave been completed and then analyzing if there exists the shareholder structure reform.Firstly, the thesis tests the share price changes of listed companies before and after thepricing ex-date. All samples are divided into two teams: mainly about the largeshareholders and mainly about the institutional investors, analyzing the CAR before andafter the pricing ex-date in different issuance object case. The results show that there isnegative and positive CAR in lasting20trading days before and after the pricing ex-date inprivate placements by the large shareholders mainly; there is positive and negative CAR inlasting20trading days before and after the pricing ex-date in private placements by theinstitutional investors mainly, both are statistically significant. This confirms that largeshareholders manipulate the stock price relatively high in the lasting20days before pricingex-date in the private placement mainly by large shareholders and the stock price isrelatively gradually reducing in the lasting20days after pricing ex-date; large shareholdersmanipulate the stock price relatively low in the lasting20days before pricing ex-date inthe private placement by institutional investors mainly and the stock price is relativelygradually increasing in the lasting20days after pricing ex-date. Then the thesis analyzesthe capital injection in the private placement by large shareholders, testing the change of share ratio before and after the private placement of financial institutions. It shows that theshare ratio of financial institution after the private placement of listed companies isgenerally lower than that before the private placement, so it can be inferred that this is dueto defective assets of new issuance. The thesis has certain practical significance forinvestors to identify the behavior of the private placement of listed companies and it alsoprovides related institutions with some management advice.