The effects of Private placement on long-term shareholder wealth: empirical evidence from Chinese listed firms

Cumulative abnormal return (CAR) is estimated as long-term shareholder wealth of private placement, and we propose empirical evidence of the effect of private placement on long-term shareholder wealth. Private placement of listed firms has significantly positive effect on long-term shareholder wealth. Cumulative abnormal return are positively related with offer type of private placement at the confidence of 95% level, and long-term shareholder wealth of private placement subscribed by non-cash assets is better than cash assets, cumulative abnormal returns of private placement are negatively related with the size of total assets and offer type at the significance of 95% level. On the basis of our empirical evidence, we propose the following advices, such as encouraging the subscription of stock shares of private placement, strengthening prominent assets quality of private placement, strengthening supervision and punishment of inner information transaction, and planning industry layout of corporate private placement etc. Key-Words: private placement; cumulative abnormal return; shareholder wealth; offer type; listed firms