Research On The Benefit Transmission And Market Reaction Base On The AM’s Private Placement

On May 8,2006,the China securities regulatory commission promulgated the "measures for the administration of securities issuance of listed companies”,which regulate the equity financing in our country,and it’s the first time for the listed company of our country to publish stocks private,since then private placement as a new financing channels walk into people’s horizons slowly.Due to its advantages such as low access threshold and convenient audit,it is favored by listed companies in China’s capital market.No matter the listed companies participating in private placement,the scale of private placement,or the amount of financing through private placement,the amount is rising rapidly and unstoppable.On the basis of studying a large number of domestic and foreign literatures,this paper adopts the method of combining theory with cases to analyze the profit transmission behind the private placement of AM in 2015,as well as its short-term market response and long-term financial benefits.This paper first explains the concepts of private placement and benefit delivery,then elaborates relevant theories,such as tunneling effect theory and information asymmetry theory,combined with relevant literature,and reviews domestic and foreign literature.Secondly,analyze the AM company acquired 51% of the shares of R company to achieve control and its private placement program and process,combing the development of the entire case timeline.We found that in this acquisition of the private placement process have two ways to delivery interest,they are low-priced issuance and overestimate the value of assets which will be injected.Analys the issue price of private placement,we can found that AM realize low price issuance through two ways: the choice of timing of private placement and the choice of pricing base date.Based on the analysis of the value of the injected assets,it is found that the financial situation and transaction price of the injected assets are unreasonable,and the appreciation rate of the asset appraisal company on the underlying assets is too high,which is suspected to be inflated.In this way,AM company’s controlling shareholders can not only get additional consideration,but also obtain high equity at low cost,but this will inevitably lead to different prices of the same share,And the controlling shareholder further strengthens the control to the enterprise with the low cost,it severely dilutes minority shareholders’ equity,and it will lead to the flow of interests from minority shareholders who have not obtained additional rights to major shareholders,thus damaging the interests of minority shareholders.In addition,the paper also analyze the private placement of AM company’s short-term market response and long-term financial performance.This paper believes that AM this private placement has positive announcement effect,after the notice date the short-term market reaction is good,but after the issue the short-term market reaction is negative.In a long time,this private placement has no positive impact on AM’s long-term financial performance.