A Research On Long-term Wealth Effect Of Overall Listing

Scale economy is more and more important in the process of rapid development of enterprise groups. The overall listing gradually becomes a significant means for enterprises to do resources integration. In addition, the improvement of capital market also benefits the overall listing. Our government clearly proposed the policy that encouraging the state-owned enterprises to list overall after the reform of non-tradable shares, precluding the overall listing of Chinese enterprises. Meanwhile, the long-term wealth effect after the overall listing becomes one of the research focuses.Based on the efficient market hypothesis, principal-agent theory and enterprise boundary theory, the paper studies those listed enterprises which announced and finished their overall listing in Shanghai Stock Exchange and Shenzhen Stock Exchange during 2007 to 2010. It calculates the purchase after the listing by the event study and takes BHAR as the indicator of long-term wealth effect. Here into, the benchmark yield E can be calculated by controlling enterprise model to analyze the long-term effect achieved and make comparison between the additional stock issue and stock-for-stock. The paper discusses the overall listing’s influence on the listed enterprises’ long-term wealth effect by the formal empirical study and theory from the aspects of announcement effect, insider trading, asset injection and enterprises’ ownership property. At last, it makes a summary and gives relative suggestions to listed enterprises to choose overall listing strategy and stock market supervisors to perform functions.The study result suggests that enterprises adopting overall listing can generate certain long-term wealth effect especially that from additional stock issue. It not only can provide a reference for administrative bureau of state-owned property to make relative supervision policies, but also can provide the basis and reliable data for the groups which are likely to list overall.