Empirical Research On The Influence Of The Types Of Investors In Private Placement On The Corporate Performance In Listed Companies

In today’s rapid economic development,financing ability is the key factor to maintain the survival and development of companies.For listed company,refunding via capital market becomes a significant method to collect funds.At present,equity refinancing attracts both domestics and foreign scholars’ attention.With the implement and complete of the reform of non-tradable shares,China Securities Regulatory Commissions(CSRC)issued ‘Measures for the Management of Securities Issuance of Listed Companies’ on May 8th 2006,the legal status of private placement which is a new equity refinancing in China has been identified.Comparing with public issue and the other financing ways,private placement is popular because of its advantages,such as: lower issue cost,less issue restrictions,quicker financing speed and etc.Academic circles still extend the research wide of private placement from the aspects like: issuance of motivation,pricing mechanisms,shareholder wealth effects,earnings management before and after implement and so on.Some literatures did the researches of the corporate performance differentiation affect by different private placement objects,however less literatures studies the topic from strategic and finance investors’ angles.This paper discusses the motivation and the influence of strategic and financial investors subscribe private placement base on the samples which are listed companies implemented private placement in Shanghai and Shenzhen from 2006 to 2012.Firstly,this paper reviews and summarizes the current research situation of private placement at home and abroad.Secondly,this paper states the motivation of different types of investors to subscribe for new shares and the impact on the performance of the company.Based on the principal-agent theory,equity balance theory,asymmetric information theory and strategic management theory,analyzing the motivation of strategic investors and financial investors to participate in the subscription of private placement of listed companies and its impact on the performance of the company,and puts forward the hypothesis of this paper.Then using the data of China’s listed companies which implemented private placement to test the influence of strategic investors and financial investors to participate in private placement on company corporate.Based on theoretical analysis and empirical analysis,this research draw the conclusions as follows:(1)Listed company implement private placement lead positive impact to both short-term and long-term operating performance.(2)The long-term performance is better in the company who only issue private placement equity to strategic investors but not financial investors.(3)The short-term performance is better in the company who only issue private placement equity to financial investors but not strategic investors.Aim to the conclusion,the report provides the following recommendations:(1)Encourage listed companies adopt private placement method to equity refinancing.(2)Encourage listed companies set strategic investors to private placement object.(3)Encourage financial investorsparticipate into company management.(4)Appropriate to extend the subscription period for investors to subscribe for new shares.This research is segmented into six sections,the structure as follows:The first section is the foreword,which firstly explains the background and the significance of this paper,then introduces the writing ideas and methods of this paper,finally shows the structure of this research.The second part is a review of the literature at home and abroad.Firstly,summarizing the research related to the private placement of listed companies,including the motivation of private placement of listed companies,and the influence of private placement on the company operating performance and shareholders’ wealth,then summarizes the research related to the influence of listed company on corporate governance and corporate performance,and a literature comment.The third part is the summary of the theory of the type of investors in private placement and company performance,firstly explains the concept and types of private placement,and then analyses the type of investors,sum up the effect of strategic investors and financial investors in corporate governance,and finally state the correlation theories such as principal agent theory,equity balance theory,asymmetric information theory and strategic management theory.The fourth part is the theory analysis of the relationship between the investors in private placement and corporate performance,explain the influence of private placement on coporate performance in listed companies on theory,the influence of strategic investors and financial investors to participate private placement on the company operating performance,and proposes three hypotheses of this research.The fifth section is empirical tests for the relationship between the investors in the private placement and corporate performance,take the companies which implemented private placement in China’s two cities of Shanghai and Shenzhen stock market for the period from 2006 to 2012 as the research sample,and then mainly use statistical methods such as variable descriptive statistics,correlation analysis and multivariate linear regression analysis method to test the three hypothesis of this paper.The sixth section is the conclusions and the policy recommendations of this paper,summarizes the results of the full text,and puts forward the corresponding policy recommendations.The main contributions of this study:(1)Although there are many literature about the influence of private placement of listed companies on corporate performance and the influence of related shareholders and non associated shareholders to participate private placement on corporate performance.But there is few literature about the motivation of strategic investors and financial investors to participate private placement and the influence of strategic investors and financial investors to participate private placement on corporate performance.Studying the influence of the motivation of strategic investors and financial investors to participate private placement and the influence of strategic investors and financial investorsto participate private placement on corporate performance can enrich the literature about the influence of private placement of Listed Companies in China on corporate performance.(2)Based on the equity balance theory and principal agent theory,from the point of the effect of strategic investors and financial investors in corporate governance to study the influence of strategic investors and financial investors to participate private placement on corporate long term performance and short term performance can enhance the understanding of the effect of strategic investors and financial investors in corporate governance and the purpose of strategic investors and financial investors to participate private placement of listed companies.