Case Analysis Of Directional Add-Issuance By Shanghai Tunnel Engineering Co.,Ltd,for Asset Acquisition

With completion of share division reform and the perfection of China’s capital market,controlling shareholders have successively injected originally stripped assets into listed companies,and those companies’ directional add-issuance for asset acquisition has become the focus of attention in our securities market."Measures for the Administration of the Issuance of Securities by Listed Companies " and "Measures for the Administration of the Takeover of Listed Companies" issued in 2006 have clearly defined the legitimacy of listed companies to inject valuable consideration through directional add-issuance as controlling shareholders.Based on empirical researches on China’s securities market,it can be indicated that there are widespread phenomena of major shareholders who have utilized directional add-issuance to transfer the assets for the benefit transmission.Most scholars at home and abroad believe that directional add-issuance implementation by listed companies can bring about short-term positive effects,but there is still no unanimous agreement for its long-term positive impacts.Currently,academic researches on directional add-issuance are mainly concentrated in empirical work and overall conditions,and there are very few case studies upon detailed assets-acquiring directional add-issuance.Therefore,on the basis of the case of Shanghai Tunnel Engineering Co.,Ltd.’s directional add-issuance implementation for acquiring controlling shareholders’ assets,this paper has studied on whether directional add-issuance for asset acquisition can produce long-term positive effects for listed companies and provide guidance and reference for listed companies’ selection of directional add-issuance through analysis of enterprise’s business performance and variation in shareholders’ wealth after the directional add-issuance.This paper has adopted a research method combining normative research with case analysis.In normative research part,it has reviewed and summarized relevant literature at home and abroad,and carried out theoretical overview of the concept,types and theoretical basis of directional add-issuance and its means and motivation to acquire assets.In case analysis part,taking directional add-issuance implementation by Shanghai Tunnel Engineering Co.,Ltd.for acquiring controlling shareholders’ core assets as the research object,this paper has generalized it impacts on corporate performance,related transaction and shareholders’ wealth through combining with financial data and chart analysis while on the basis of investigating case process,characteristics and motivation,for the sake of further analyzing reasons for corporate business growth after asset acquisition.Lastly,the paper has drawn research conclusions through a series of aforementioned analysis,excavated universality of analytic sense in this case,and put forward some constructive suggestions for implementation of directional add-issuance by listed companies.The main contributions of this paper rest with:(1)more objectively evaluate advantages of Chinese listed companies’ selection of such a model for directional add-issuance through theoretical analysis of means and motivation of assets-acquiring directional add-issuance;(2)analyze characteristics,motivation and effects of listed companies’ utilizing directional add-issuance to acquire major shareholders’ assets through combining with real cases in China’s securities market;(3)reveal economic consequences of case company’s directional add-issuance implementation by adopting the method of financial analysis,provide referential cases for directional add-issuance by other listed companies.This paper is divided into five parts.Firstly,the introduction: it has elaborated research background and significance of the paper,reviewed and reorganized relevant literature of directional add-issuance,and point out the shortcomings of the research,explained the research method and ideas,and constructed the overall framework of this paper.Secondly,a theoretical overview of directional add-issuance for asset acquisition: it has firstly introduced the concept and types of directional add-issuance,analyzed the method and motivation of directional add-issuance for asset acquisition,and lastly elaborated three related theories in directional add-issuance.Thirdly,case introduction of Shanghai Tunnel Engineering Co.,Ltd.’s directional add-issuance for asset acquisition.It has carried out elaboration and analysis of the process and characteristics of the case on the basis of understanding business conditions and corporate ownership structure of Shanghai Tunnel Engineering Co.,Ltd.Fourthly,case analysis of the motivation and effect: it has illustrated motivation of Shanghai Tunnel Engineering Co.,Ltd.’s directional add-issuance for asset acquisition,analyzed the case effects mainly from four perspectives including profitability,operational ability,growth ability,related party transactions and shareholders’ wealth and reasons for business performance growth of Shanghai Tunnel Engineering Co.,Ltd.after the directional add-issuance.Fifthly,conclusions and inspirations: on the basis of the previous conclusion,it has summarized impacts of directional add-issuance upon financial performance of listed companies and put forward relevant suggestions,so as to provide experience for directional add-issuance on the spread and implementation.