The Impact of Private Placement on Stock Returns

Abstract

This paper explores the impact mechanism of private placement on stock returns in China's A-share market, and analyzes the differences of stock return performance under different market environments, private placement scales and issuance purposes with empirical data. The study finds that the announcement of private placement has a short-term excess return effect on stock prices, and the stock return performance is significantly affected by market trends; large-scale and small-scale private placement have more obvious positive returns than medium-scale ones, and the private placement for asset restructuring has a more significant promotion effect on corporate performance and stock returns than project financing. In addition, the discount rate of issuance and the type of subscribers also have different degrees of impact on post-issuance stock returns. This paper puts forward relevant investment suggestions for investors and regulatory suggestions for the capital market, which provides a reference for understanding the market performance of private placement in China.