Research On Benefits Transfer During Private Placement

Since equity division reform in 2006,Private placement has increasingly become one of the important ways of equity refinancing and it has a great popularity among the listed companies.The numbers of companies and amount of value have been growing fast since 2006.There is no doubt that Private placement has various merits compared to other refinancing measures.For instance,no profitability requirements and pricing benchmark is easy to control.What's more,the companies can choose subscriber at their will.Because the private placement involves a new distribution of interests between shareholders and original shareholders,major shareholders have a incentive to transfer benefits bu paying lower consideration or injection of non-performing assets.At the same time,China's current shareholders structure is relatively concentrated,the other shareholders can't checks and balances major shareholders' behavior effectively,so major shareholders have the chance to transfer interests because of imperfect relevant laws and regulations.Private Placements can be divided into different kinds according to different standards.Cash subscription and asset injection are very common among those kinds.At present,the research on the private placement more focused on the asset injection with empirical study.But this passage mainly focuses on cash subscription and study it through case study.The passage mainly analyzes the means that major shareholders use to transfer interests and discover real purpose of major shareholders.This paper choose GeZhouba's private placements which conducted in 2014 as the object to analyze the process of the Private Placement,the means that major shareholders take,and the impact on financial index through case study and event study on basis of summarizing the predecessors' research results.And finally the paper comes to conclusions that: 1.Private Placement conducted by major shareholders has the phenomena of benefits transfer and it has different ways to transfer.2.As a result of transferring of benefits,the private placement has a negative impact on listed companies' financial and operational performance.