The Motivation and Influencing Factors of Rights Offering after the Reform of Non-tradable Shares
|School||Chongqing University of Technology|
|Keywords||Listed company Rights offering Equity financing|
To be an important way of equity financing, rights offering plays a decisive role in China’s stock market. But, many problems appeared in the process of rights offering. For example, because of China’s listed company always prefer to choose equity financing to raise funds, some listed company would manipulate the discretionary accruals in order to reach the standards of CRSC what caused extremely bad influence to the securities market and investors.The split share structure is one of important reasons which caused China’s equity financing preference. The reform of non-tradable shares which starts from 2005, has almost completed in December, 2006. This is a different period which has different characteristics in the stock market. So is rights offering normative in such a new market environment? And what factors caused this behavior? To answer these questions, the full text has adopted the norm analyze the research approach of combing with the positive research. It can provides the corresponding countermeasures and suggestions to Chin’s less standard behavior of allotment of shares.Through analyze the previous literature and China’s policy about rights offering, the writer find that the equity financing preference in our country. And maybe some listed companies choose rights offering in order to solve the problem of capital shortage and the abnormal capital structure. We conducted positive research to know the factors caused rights offering in this special period.In the case study the writer used the A-share listed companies in shanghai and Shenzhen which are qualified for right offering from 2007 to 2010 as the sample. In a logistic regressive model, the motivation of rights offering is the dependent variable, while listed company’s asset-liability ratio, free cash flow, ownership concentration, the controlling shareholders, the growth, occupation of fund are dependent variables. The regressive result demonstrated that listed company’s assets-liability ratio, the growth are strongly positively related to its motivation of rights offering, whereas the ownership concentration is strongly negatively related to its motivation of rights offering. And the free cash flow is negatively related to its motivation of rights offering, whereas the controlling shareholders, occupation of fund are negatively related to its motivation of rights offering.Utilizing the listed companies that had issued shares from 2002 to 2004 as another sample, the writer adopt event study methodology to construct a function of the market reaction. The result illustrated that the attitude of investors are negative, and they don’t like this behavior of financing.At the final part of this paper, we integrated our case study and the reality of the listed company’s rights offering in equity financing.Through the research mentioned above, this thesis impel the listed companies to use the rights issue fund with more planning and rationalization and expects to give some suggestions for the investors. This text advise to encourage the positive behaviors in rights offering, and to restrict the negative behaviors.