Research On Tunneling Of The Asset-injection Of The Private Placement

Private Placement has the advantages of lower issuance conditions,simple procedures and more flexible pricing than other financing methods,since the shareholder structure reformed,the Private Placement receives a warm welcome from listed companies and large shareholders,and becomes the one of the most popular equity refinancing.Private Placement can raise funds and supple the liquidity of listed companies,and ease the financial pressure on listed companies,and develop new projects.Private Placement also can lead into strategic investors who has a series of rare social resources,the resources include good quality,excellent management skill and market brand,and then the strategic investors can improve the management level of listed companies,improve the governance structure of listed companies.Private Placement also can revitalize the good assets of large shareholders,So that the overall listing of listed companies,the industrial chain of listed companies is improved,related party transactions can be reduced,listed companies become stronger and bigger,the competitiveness of listed companies can be improved.But,the stocks that be hold by large shareholders from the Private Placement have a longer lock-up period,and the risk of loss caused by uncertain factors such as stock price volatility or the operating conditions of listed companies is relatively large in the lock-up period.Large shareholders may seek ways to achieve the transfer of benefits,the tunneling may damage the interests of minority shareholders who not participate in the private placement.So if has tunneling,what ways can be used to transfer benefits,and the impact of tunneling is worth exploring and studying.This paper reviews the research production of private placement by domestic and overseas scholars,and uses the theory of asymmetric information and principal-agent theory as the basis,then chooses the asset-injection of W Company in 2013 for a case to analysis.First,analyzing the case and finding there is a problem of tunneling of private placement in W Company,the paper finds there are several ways of tunneling: The first is to control the price of issue by spreading the bad news before private placement and choosing the timing of issuance;The second is to increase the assessed valuation value;The third is to increase the intensity of cash dividends after the Private Placement.Then,analyzing the impact of tunneling behavior on its operating performance,the paper selects the financial data of the listed companies in 2010-2016,and finds that the related transactions not reduce,state of operation becomes worse in the long-term.In the end,the paper considers,the listed companies do exist tunneling,and the main ways include controlling the price of issue,increasing the assessed valuation value and increasing the intensity of cash dividends after the Private Placement.Because the tunneling of private placement,the listed companies don't achieve the purpose of private placement in the short-time and the state of operation are damaged in the long-time.Then,the paper has some advices: First,we must improve the pricing mechanism,first day of issue as the pricing reference date;Second,the regulator should strengthen the verification of major shareholders holdings behavior before the Private Placement,prevent the major shareholders holdings behavior to spread bad news,drive down the stock price,and control the issue price of private placement;Third,the regulator should regulate the scope of the value added value of asset valuation to prevent the asset value be inflated;Forth,developing cash dividends constraint mechanism,the regulator should strengthen the supervision of cash dividend behavior of listed companies after the Private Placement thereby enhancing the protection of the interests of minority shareholders.This paper combines theory and case,it can provide more intuitive in-depth evidence,enrich the research of the asset-injection of the Private Placement and tunneling,and provide the direction and basis for improving and standardizing the related policy.Cultivating minority shareholders consciously participate in corporate governance,and actively safeguard the legitimate rights and interests,it is also conducive to the potential investors to identify risks and rational investment,and to refuse blindly following.Then the capital market of China can develop in a health.