Research On The Influence Of The Purpose Of Fundrasing On Stock Price Of Chinese A-share Listed Companies’ Private Placement

Private placement refers to a kind of equity financing behavior in which enterprises raise funds by issuing new shares to specific investors.It can not only solve the financing needs,but also improve the capital structure of enterprises,strengthen the control right and alleviate the principal-agent problems.During the period from January1,2018 to December 3,2021,the total amount of IPO and rights offering equity financing was 1,413 billion yuan and 135.3 billion yuan respectively,while the funds raised by private placement in the same period reached 3,175.5 billion yuan,several times or even tens of times that of other financing instruments,which also provided a large number of research samples for domestic scholars to study the private placement market.Private placement is favored by listed companies and market investors due to its advantages such as low issuing threshold,high raising amount,the ability of investors to obtain a large number of the company shares at a certain discount without market fluctuations,sufficient time for listed companies to independently decide the issuance date and the final decision of pricing form.However,no matter what form of capital operation the listed companies take,the most concerned issue for market investors and listed companies is whether the company’s share price can obtain excess return rate in the secondary market.Based on the perspective of secondary market institutions and small and medium investors,this paper studies the short-term and longterm impact of private placement on stock prices,and hopes to provide theoretical basis and data support for investors’ investment decisions.The short-term impact is mainly to study the short-term change of stock price caused by the announcement of the implementation of private placement,namely the short-term announcement effect or short-term wealth effect;the long-term impact is mainly to study the long-term change of stock price after the announcement of the implementation of private placement,namely the long-term wealth effect.After reviewing a large number of literatures related to the wealth effect of private placement,this paper finds that domestic researches mainly focus on the wealth effect of short-term announcements of private placement,while there are few researches on the long-term wealth effect.In addition,researches on influencing factors mainly focus on issuance data such as fundraising scale,subscription method,subscription proportion of major shareholders and discount rate of private placement.However,there is a lack of research on the actual use of raised funds in private placement.In order to improve the research system of wealth effect of private placement,this paper selects listed companies that implement private placement between July 1,2018 and June 30,2021 as research samples.First,the event study method is adopted to study the short-term wealth effect and long-term wealth effect of the implementation announcement of private placement in China.And further using the event study method and multiple regression analysis method to study the use of fundraising on the shortterm announcement effect and long-term wealth effect of private placement.This paper finally draws the following conclusions: first,the first day of private placement has a positive short-term wealth effect,but the effect also has a attenuation effect;Second,the short-term wealth effect varies with different uses of fundraising.The short-term wealth effect of project financing is the most obvious and the most stable,while that of replenishing liquid assets is the weakest.Third,it has positive longterm wealth effect.Fourth,the long-term wealth effect of different uses of fundraising is also different.The long-term wealth effect of private placement of project financing is negative in the early stage and turns positive in the later stage.The private placement of supplementary liquid assets has a stable positive long-term wealth effect,while the positive long-term wealth effect of private placement of asset restructuring is not obvious.Finally,according to the relevant conclusions,corresponding suggestions are put forward for listed companies,secondary market investors and regulators respectively.Listed companies can choose private placement as financing means according to their own conditions,which will also help the company’s stock price to rise stably in the long run.Secondary market investors should not make investment decisions based on the announcement of the implementation of private placement,because some funds may choose to cash out after the announcement,resulting in a decline in the stock price.However,the best time period for long-term investment in companies that have implemented private placement is seven months after the implementation of private placement.Regulators still need to improve the information disclosure system and regulate the behavior of listed companies’ private placement.