Empirical Study Of ST Company’s Asset Reorganization And Stock Market’s Reaction

On Mar 21 st, 2016, Shanghai Stock Exchange(SSE) declared the delisting of Zhuhai Boyuan Investment Company Limited. *ST Boyuan became the first being delisted company due to illegal disclosure of important information in China stock market. On behalf of the outstanding enterprise in China, listing company is the basis of securities market. In Apr, 2012, Shanghai and Shenzhen Stock Exchange released two legals to improve the quality and supervision of China capital market. Along with the strict implementation of delisting policy, as well as the continued improvement of China capital market, the delisting of ST companies will be common.Under the head wind of not being fully complemented of registration system, hundreds of companies are waiting for IPO, which makes the current companies with listing qualification in great demand and listing companies not willing to give up the listing qualification. Thus, listing company will try to protect their resource, especially the capital reorganization as the predominated improving method. Capital reorganization can in a short time improve the financial condition, eliminate the unnecessary capital and merge other outstanding companies. Or they sell the resource and rely on other company’s resource to change their position. Within one month after the implementation of mainboard delisting system, there were over 20 ST companies announcing the reorganization. Moreover, some companies insisted on continual reorganization after many failures. It is obvious that capital reorganization has become the key tactics to avoid delisting of ST companies.In our capital market, the performance of ST companies is often the focus of market owing to the special status. Thus, ST companies’ reorganization attracts more concerns. Is the reorganization hype theme or really helpful to the economic effect? This will be the research point of essay.Focusing the above issue, this essay will combine the theory and demonstration. It uses factor analysis, variance analysis and other methods to do research of sample companies’ financial performance. Then as per the research result, further market performance analysis will be made by event study. After the comprehensive consideration of financial and market performance, writer will provide the shareholder of listing company, government functional department and other average investors with relative politic suggestion about ST company reorganization.It is found that capital reorganization will be obviously helpful to financial performance of ST companies after implementation in first year. However, there will be no obvious effect in second year. Moreover, different reorganization will make different effect to ST companies, mainly for the performance improvement of debt reorganization. Merger and acquisition will fail in resource integration and have strong short-term effect. Capital elimination does help to the performance while equity transfer is limitedly effective to improvement of ST company performance.There are five parts of this essay. The first part is the guidance, including the problem introduction, research value and meaning, literature review, research method, research innovation and so on. The second part is about ST policy and research overview of capital reorganization. One is to introduce the special settlement of certain listing companies and the other is to introduce the relevant theory research of capital reorganization and performance and to qualitatively analyze the influencing factor of reorganization performance. The third part is the financial performance analysis of ST company capital reorganization, including sample and statistics selection, representation of research method and result. The fourth part is the market performance analysis of ST company reorganization, analyzing and checking the performance and influencing factors of ST company reorganization by event study. The fifth part is about the policy recommendation and prospects, mainly about result analysis and other suggestion.This essay will combine the theory with demonstration, using event study, descriptive statistical method, factor analysis, variance analysis and other ways to explore the performance issue of ST company reorganization from multiple perspectives, to make the research result more persuasive.