Research Of The Influencing Factors On The Return Of The Private Placement

The private placement has been the most important instrument of equity financing since the reform of non tradable shares. The relatively stable income has attracted more and more investors to invest the region, but many stocks of the private placement had been fell below the issue price in recent years,which reminded the investors of the risks. thoughtful investing is necessary for the investors and they also shall improve the ability of choosing the stocks. The paper has studied the influence factors on the return of the private placement through the empirical research, and has put forward some reasonable suggestions to the investors according to the results of the study.The paper chooses the company which had issued the private placement’s stocks from 2009 to 2013 as the sample, and studies the influence factors on the return of the private placement from two aspects: how to choose the stock before the issuance and when to sell the stock in the lock-up period. Before the issuance, the result shows that the discount rate and the subscription mode has a significant positive effect on the return of the private placement, and Eps, shareholders and institutional ownership has a significant negative impact on the return of the private placement. In the lock-up period, the result shows that the overall market reaction to the full sample is significantly negative,and those samples which have big shareholders involved or asset injection can offset some negative market reaction.Based on the results of the study, the paper offers the following recommendations to the investors: In the primary market investors should consider the project of the private placement which has a higher discount rate, a directional asset injection and relatively dispersed ownership structure; In the secondary market investors should consider that the cost price is close to or lower than the issuance price, directional asset injection and relatively dispersed ownership structure of the issuance of the project. In the lock-up period, whether selling the stocks depends on the situation of large shareholders and the asset injection.