Study On The Change Of Committed Investment Projects Of Listed Companies

Securities market is an important source of project capital for listed companies.Since the reform of non-tradable shares in2005, listed companies have raised a lot ofcritical funds by way of share allotment, additional equity offer and convertiblebonds. Associated with this financing boom, however, China’s securities marketwitnesses massive changes in the committed use of financing capital. According tothe previous studies, those changes often accompany by "misappropriating" motive,which not only leads to long-term deterioration of the operating results of listedcompanies, but also hurts the interests of investors and their investment confidence.Therefore, it is very important and necessary to study the motivation of listedcompanies who frequently change committed use of raising funds. The study willaccordingly paves way for timely screening and coping with financing behavior with"misappropriating" motivation.This paper investigates the use of listed companies’ financing capital in China’sstock market from2007to2009and aims to find out why they change theirpromised investment projects in the following five years from2007to2011.Through a combination of theoretical analysis and empirical test study the papermainly addresses three issues. Firstly, by binary logistic regression model, the paperclarifies what factors will affect the listed companies changing promised investmentprojects with raised capital; Then, on the basis of the first model, it further dividesthe changes into liquidity supply and other changes. Also by binary logisticregression model, it ineptly explores the factors influencing changes related withliquidity supply. Finally, with descriptive statistical analysis, it shows whether andhow changes in promised investments will affect short-term and long-term operatingperformance of listed companies.The conclusion of this paper is that ownership concentration, company size,profitability and asset-liability ratio are highly related with changes in promisedinvestment of raised fund. In addition to the above factors, the growth rate and cashflow also significantly influence the changes relating with companies’ liquidity.Meanwhile, changes of promised investment of raised fund are not conducive to theinterests of the company and its long-term development. Therefore, in order toprevent listed companies from randomly changing promised use of raised fund, the regulatory authorities should increase their screening efforts, and keep track of theuse of funds, convey that information to investors in an open and transparent way.Based on the previous studies on factors influencing changes of committed useof raising capital, this paper further analyses what will lead to the change intosupplement to liquidity, which provides this research a new perspective. However,there is also a great lack of research due to variable selection and research methods.Thus the study of changes in committed use of raised funds from the perspective ofchange results and the way of refinancing need to be further extended.