The Impact Of New Refinancing Regulations On The Market Reaction Of China’s Listed Companies’ Private Placement

Among corporate refinancing methods,private placement is a popular financing method with the advantages of flexible issuance and simple procedures.Before 2017,the private placement market developed rapidly,once exceeding RMB100 billion in scale,but it also showed many chaos.Large shareholders endorsed the "bottom-up" of the subscribers,while poor-quality enterprises bought high-quality enterprises instead,or it was not uncommon to take advantage of cases such as "money-sharing" of fixed placement,which seriously disrupted the market order and hindered the healthy development of the market.In order to change this market ecology,the CSRC revised the refinancing policy in 2017.The regulation on the issuance of targeted additional shares has been strengthened in an all-round way.This round of strong regulation has improved the market ecology of targeted additional shares and increased the return of investors.However,it has also dampened the enthusiasm of enterprises for targeted additional shares and further exacerbated the problem of financing difficulties for enterprises.On February 14,2020,in order to develop the direct financing market and also to help enterprises fight against the epidemic and tide over the economic downturn,the CSRC issued the Decision on Amending the Implementation Rules for Non-public Offering of Shares by Listed Companies,which significantly relaxed the pricing mechanism,launch mechanism and scope of subscription targets for refinancing.The policy revision reactivated the private placement market.The number of private placement plans disclosed in 2020 increased sharply from 183 last year to523.The new regulations have a wider scope of impact and better achieved the policy expectations.However,in the process of marketization of private placement,it is an inevitable phenomenon that the number of private placement will increase and the project quality will be polarized.Under the circumstances that there are many changes in the market characteristics of private placement after the new regulations,what impact will this refinancing policy have on the investors in the secondary market? In order to answer this question,this paper studies the announcement reaction of private placement.At the same time,the increase in the size of the private placement market will bring about a problem that can be met,that is,the impact that a large number of shares released after the end of the lock-in period in the future may bring to the market liquidity.Therefore,the research on the impact effect before and after the lifting of the ban of the private placement is also very meaningful.Therefore,the research questions in this paper can be summarized as follows:whether the refinancing policy issued in 2020 will affect the market reaction of private placement,and further divide the market reaction into announcement effect and lifting ban effect;In order to answer this question,this paper selects the listed companies which issued the successful private placement plan from June 2017 to December 2021 as the research sample,based on the event research method,using T-test,multiple linear regression to study the impact of the refinancing policy in2020 on the market reaction of private placement.At the same time,as the subscriber identity is a very important influencing factor in the announcement effect of private placement,this paper also discusses whether the subscriber identity will play a regulating role in the above path.The results of this study are as follows: the average value of AAR of listed companies on the date of initial disclosure of the private placement plan is 0.67%,i.e.the announcement of the private placement will have a positive announcement effect,the new refinancing regulations in 2020 will have a negative impact on the announcement effect of the private placement,and the average value of AAR on the announcement date will decrease to 0.39% from 1.07% before the new regulations;Institutional investors’ subscription will further aggravate the weakening effect of the policy on the announcement effect,which may be due to the increase in short-term speculative preference of institutional investors after the release of the new regulations,resulting in a decrease in market acceptance of institutional investors’ subscription;The release date of the private placement will have a negative impact effect,and the new refinancing regulations in 2020 will reduce this negative effect.