A Comparative Study of the Refinancing Announcement Effect of Listing Corporation in China

Wan  Xiao; Yukun  Zhang

doi:10.4236/ajibm.2018.88118

Wan Xiao, Yukun Zhang

Abstract: The paper chooses the listing Corporations which refinanced from June 1, 2006 to December 31, 2014 as samples to test and compare the announcement effect of five refinance modes, which are public issuance, non-public issuance, allotment and issuance of corporate bonds, and convertible bonds. Study has showed that the announcement effect of non-public issuance is positive and allotment is negative in large confidence degree, while public issuance and convertible bonds issuance show negative in a lower confidence degree, and issuance of corporate bonds isn’t significant. Therefore, China’s capital market favors non-public issuance most and regard convertible bonds as substitute, think allotment bearish widely, while see light issuance of corporate bonds. So, we must develop incentive effect of convertible bonds, Strengthen corporate debt’s constraint mechanism, regulate the behavior of the big shareholders in allotment. It is found refinancing information leakage phenomenon in empirical research which should cause the attention of regulators.

Keywords: Listed Corporation, Refinancing, Announcement Effect, Event Study

Cite this paper: Xiao, W. and Zhang, Y. (2018) A Comparative Study of the Refinancing Announcement Effect of Listing Corporation in China. American Journal of Industrial and Business Management, 8, 1757-1769. doi: 10.4236/ajibm.2018.88118.

References

[1] Myers, S.C. and Majluf, N.S. (1984) Corporate Financing and Investment Decisions When Firms Have Information that Investors Do Not Have. Journal of Financial Economics, 13, 187-221.
https://doi.org/10.1016/0304-405X(84)90023-0

[2] Asquith, P. and Mullins, D.W. (1986) Equity Issues and Offering Dilution. Journal of Financial Economics, 15, 61-89.
https://doi.org/10.1016/0304-405X(86)90050-4

[3] Kalay, A. and Shimrat, A. (1987) Firm Value and Seasoned Equity Issues: Price Pressure, Wealth Redistribution, or Negative Information. Journal of Financial Economics, 19, 109-126.
https://doi.org/10.1016/0304-405X(87)90031-6

[4] Brous, P.A. and Kini, O. (1994) The Valuation Effects of Equity Issues and the Level of Institutional Ownership: Evidence from Analysts’ Earnings Forecasts. Financial Management, 23, 33-46.
https://doi.org/10.2307/3666054

[5] Wruck, K.H. (1989) Equity Ownership Concentration and Firm Value: Evidence from Private Equity Financings. Journal of Financial Economics, 23, 3-28.
https://doi.org/10.1016/0304-405X(89)90003-2

[6] Hertzel, M.G. and Rees, L.L. (1998) Earnings and Risk Changes around Private Placements of Equity. Journal of Accounting Auditing & Finance, 48, 21-35.
https://doi.org/10.1177/0148558X9801300102

[7] Chen, S.S., Ho, K.W., Lee, C.F., et al. (2002) Wealth Effects of Private Equity Placements: Evidence from Singapore. Financial Review, 37, 165-183.
https://doi.org/10.1111/1540-6288.00010

[8] Anderson, H.D., Rose, L.C. and Cahan, S.F. (2006) Differential Shareholder Wealth and Volume Effects Surrounding Private Equity Placements in New Zealand. Pacific-Basin Finance Journal, 14, 367-394.
https://doi.org/10.1016/j.pacfin.2006.01.003

[9] Booth, J.R. and Ii, R.L.S. (1986) Capital Raising, Underwriting and the Certification Hypothesis. Journal of Financial Economics, 15, 261-281.
https://doi.org/10.1016/0304-405X(86)90057-7

[10] Brounen, D. and Eichholtz, P.M.A. (2001) Capital Structure Theory: Evidence from European Property Companies’ Capital Offerings. Real Estate Economics, 29, 615-632.
https://doi.org/10.1111/1080-8620.00025

[11] Arsiraphongphisit, O. (2008) The Information Conveyed by Debt and Equity Announcements in Australia. International Journal of Banking & Finance, 5, 61-86.

[12] Krishnaswami, S. and Yaman, D. (2007) Contracting Costs and the Window of Opportunity for Straight Debt Issues. Journal of Banking & Finance, 31, 869-888.
https://doi.org/10.1016/j.jbankfin.2006.06.013

[13] Ashhari, Z.M. (2009) Conventional vs Islamic Bonds Announcements: The Effects on Shareholders’ Wealth. International Journal of Business & Management, 4, 105-111.

[14] Dann, L.Y. and Mikkelson, W.H. (1984) Convertible Debt Issuance, Capital Structure Change and Financing-Related Information: Some New Evidence. Journal of Financial Economics, 13, 157-186.
https://doi.org/10.1016/0304-405X(84)90022-9

[15] Eckbo, B.E. and Masulis, R.W. (1995) Seasoned Equity Offerings: A Survey. Social Science Electronic Publishing, Amsterdam, 1017-1072.

[16] Liu, Q. and Qi, X. (2009) Research on the Influence of Listed Companies’ Issuance of Corporate Bonds on Stock Price. Journal of Central University of Finance and Economics, No. 9, 28-33.

[17] Tan, Y. and Liang, X. (2011) Research on the Announcement Effect of China’s Corporate Bond Issuance. Accounting News: Comprehensive, No. 3, 119-121.

[18] Fu, L., Wan, D. and Zhang, Y. (2011) A New Evidence of Financing Priority Theory: A Comparative Analysis of the Declaring Effects of Corporate Debt, Convertible Bonds and Additional Stocks. Journal of Finance Review, 3, 101-114.

[19] Wang, J. and Hu, M. (2012) Analysis of Stock Price Effect of Convertible Bonds from the Perspective of Investors’ Heterogeneous Beliefs. Journal of Finance and Accounting, No. 35, 8-11.

[20] Woods, D.H. and Brigham, A.E.F. (1966) Stockholder Distribution Decisions: Share Repurchases on Dividends? Journal of Financial & Quantitative Analysis, 1, 15-26.
https://doi.org/10.2307/2329883

[21] Stein, J.C. (1992) Convertible Bonds as Backdoor Equity Financing. Journal of Financial Economics, 32, 3-21.
https://doi.org/10.1016/0304-405X(92)90022-P

[22] Ni, M. and Zhang, Y. (2012) Mystery of the Decline of Performance after the Allotment of Listed Companies in China—Based on the Analysis of Information Asymmetry and Principal-Agent Theory. Journal of Shanxi University of Finance and Economics, No. 10, 77-87.