Analysis of the trend of stock issuance
The Shanghai and Shenzhen stock markets began to formally implement the financing method of issuing new shares on a pilot basis in June 1998, and only a few listed companies issued additional shares in 1998 and 1999. On April 3, 2, the CSRC issued the Interim Measures for Public Offering of Shares by Listed Companies, and many listed companies have "abandoned allocation and increased" one after another, and the number of additional shares has increased rapidly. From 1998 to June 3, 22, * * * 23 companies put forward and announced plans to issue additional shares. Since 21, the number of companies that put forward plans to issue additional shares has increased sharply, especially in 21, which reached a record of 127.
The stock issuance plan put forward by listed companies can only be implemented after being approved by the CSRC. Therefore, the number of additional issuance implemented is far less than the announced additional issuance plan. From 1998 to 22, 77 companies issued additional shares, including 13 original A-share and B-share companies, 55 original A-share companies, 8 original B-share companies and 1 original B-share company. Considering the relationship between the stock prices in the A-share market and the B-share market, this paper only studies the situation of the original A-share companies (including A-shares that issue B-shares at the same time) issuing A-shares, so that 68 A-share companies have issued new shares.
According to the statistics of the issuance date, the number of additional shares has been increasing since 1998.
the impact of the issuance on the stock price
from the market practice of China's stock issuance, the issuance generally has a negative impact on the market stock price, which is manifested in the stock price falling to varying degrees on the announcement date of the letter of intent for the issuance. This paper attempts to use the event research method to examine the influence of stock issuance on stock price with the change of stock price behavior before and after the event. This paper defines the announcement date of the letter of intent for additional issuance as the base date (if the announcement date of the letter of intent for additional issuance is not a trading day, the trading day after the announcement date will be the base date). This paper then takes the first 4 trading days and the last 8 trading days of the announcement date (base date) as the event period for calculating the excess return. Considering the actual situation of China's stock market, this paper uses the market-adjusted excess return (the difference between the stock return and the corresponding A-share index return) to represent the excess return of stocks in the event period (which actually means assuming that the β coefficient of all stocks is equal to 1), and investigates the influence of additional issuance on stock price behavior by calculating the average excess return and accumulated excess return of additional shares.
this paper selects 4 trading days before the benchmark date and 2 ***61 trading days after it. From the results, we can see that the excess return rate is significantly less than zero on the day of the announcement of the letter of intent for stock issuance or the next day, with an average of -3.52%, which shows that the stock price has a rapid response when the stock issuance is announced. In the 61 trading days before and after the issuance announcement, only one trading day's average excess return is significantly greater than zero, while the average excess return in 1 trading days is significantly less than zero, and the average excess return in other trading days is not significantly different from zero, which shows that the excess return is not significantly different from zero before and after the issuance announcement. In other words, after the announcement, there is no consistent situation that the excess rate of return is negative. The test of the average excess returns before and after the benchmark date of each year also shows that most of the excess returns are not significantly less than zero. Therefore, it can be considered that the stock price quickly reflects the negative effect of additional issuance on the stock price on the announcement date of the letter of intent for stock issuance or the next trading day.
analysis of increasing the engine
the amount of monetary funds of the companies that issue additional shares is not significantly lower than the market average, that is, the average amount of monetary funds of the companies that issue additional shares is not lower than the market average. Therefore, it is difficult to think that listed companies issue additional shares because of lack of monetary funds. It shows from the side that listed companies do not issue shares because of lack of money, but often because they meet the conditions for issuing shares, so they are unwilling to give up the opportunity to "circle money" through issuing shares.
We calculated the proportion of the number of tradable shares in the total number of shares of 61 companies that issued additional shares from 1999 to 21, and found that among these 61 companies, only two companies accounted for more than 5%, accounting for 3.23%+. We compare the average proportion of tradable shares in the market in each year, and find that the average proportion of tradable shares of companies that implement additional issuance is less than the market average.
at the same time, we find that the probability of listed companies in the information technology industry putting forward plans for stock issuance is relatively high; The higher the rate of return on net assets and the ratio of assets to liabilities, the more inclined the company is to put forward the stock issuance plan. From this point of view, it is reasonable for China Securities Regulatory Commission to raise the requirements of return on net assets and asset-liability ratio of stock issuance.
in addition, the higher the earnings per share, the greater the probability that the stock issuance plan will be approved. This shows that the China Securities Regulatory Commission pays more attention to the earnings per share index of the new shares to be issued when approving the stock issuance plan, and the stock issuance plan put forward by companies with high earnings per share is easier to be approved. Judging from the changing history of the conditions for issuing shares, there was basically no clear financial index requirement for issuing companies before 2, and the conditions for issuing shares put forward in the Interim Measures for Public Offering of Shares by Listed Companies issued on April 3, 2 were relatively low, and all companies that put forward plans for issuing shares basically met this condition. Therefore, the empirical results show that earnings per share have a certain impact on the probability of approval of the stock issuance plan.
however, from the historical evolution process, regulators pay more attention to the return on net assets of listed companies rather than earnings per share. In the Notice on Relevant Conditions of Issuing New Shares by Listed Companies issued on July 24th, 22, the standard of ROE was clearly raised, but earnings per share were not involved. The reason why the rate of return per share, rather than the rate of return on net assets, has an impact on the probability of approval of the stock issuance plan needs further analysis.
issuance has not effectively improved performance
One of the main criticisms of stock issuance is that it has not substantially improved the operating performance of listed companies.
in order to compare the impact of stock issuance on the company's performance, we investigated the changes of financial data of the company before and after the implementation of the issuance. We calculated the weighted average of the main financial indicators of 68 listed companies that issued additional shares from 1998 to the first half of 22 from 1997 to 21, in which the annual number of companies issuing additional shares was determined according to the issuance date of new shares. As a contrast, we calculated the changes of the market average of major financial indicators from 1997 to 21.
as far as the seven listed companies that issued additional shares in 1998 are concerned, due to the large-scale reorganization activities such as injecting high-quality assets while issuing new shares, these companies have greatly improved their operating conditions and performance after issuing additional shares. In the year of reorganization, the growth rate of net profit and main business income was very high: the average net profit rose from 21.92 million yuan to 139.85 million yuan, and the average main business income rose from 679.65 million yuan to 2,257.78 million yuan. In addition, earnings per share and return on net assets have also been greatly improved, and net assets per share have also increased significantly. This shows that the dilution effect caused by the issuance is not obvious among the seven companies that implemented the issuance in 1998. However, considering that the seven companies that issued additional shares in 1998 also implemented major restructuring in that year, that is, the additional shares were often accompanied by large-scale restructuring activities, so the substantial improvement in performance may be caused by large-scale restructuring. Accordingly, we basically excluded these seven companies from the analysis below.
As far as the five companies that issued additional shares in 1999 are concerned, in the year of reorganization, all indicators have improved to a certain extent, except the return on net assets, but the extent of change is not far greater than the improvement of market average index. Within two years after the implementation of the issuance, the net profit and main business income have dropped significantly, and the earnings per share, return on net assets and other indicators have all dropped, and the decline is far greater than that of all listed companies in the market, average index. This shows that the performance of companies that issued additional shares in 1999 has not improved, but has dropped sharply.
the performance changes of the 19 companies that issued additional shares in p>2 were worse than those that issued additional shares in 1999: the performance of the companies dropped significantly in the year of issuance. In 2, in addition to the increase in main business income, net profit, earnings per share and return on net assets decreased even more. This shows that the performance of companies that issued additional shares in 2 deteriorated more than those that issued additional shares in 1999.
for the 18 companies that issued additional shares in 22, we can only compare the relationship between their average performance before the issuance and the average performance in the market. The comparison results show that the average performance of the companies that issued additional shares in 22 is much better than the market average, that is, the listed companies that issued additional shares are excellent groups among all listed companies, and their operating performance is at a high level among listed companies. This is the inevitable result after improving the conditions for additional issuance. However, whether these companies can continue to maintain excellent performance in the year of issuing new shares and beyond is even more striking.
to sum up, the comparative results of the impact of stock issuance on the performance of listed companies show that: (1) the stock issuance has not improved the performance of listed companies as expected. Except for the companies that implemented additional issuance in 1998, which improved their performance due to large-scale restructuring at the same time, the performance of most listed companies declined after the implementation of additional issuance, and the performance of some companies dropped significantly in the same year. Therefore, the conclusion that additional issuance can improve performance is not fully supported. (2) The low conditions for the issuance of listed companies have led to the sharp deterioration of the performance of additional companies after the implementation of additional issuance, which is called "changing face". The performance changes of the companies that issued additional shares in 2 illustrate this point. (3) After improving the conditions of issuance, the average performance level of the companies that implemented issuance in 21 and 22 before issuance has been greatly improved, and the performance of the companies that implemented issuance in 21 did not show a significant decline in the year of issuance.
Conclusion
1. Companies that have issued additional shares have not significantly improved their performance after the completion of the issuance, and some even have a great decline in performance after the implementation of the issuance; Due to the expansion of capital stock, the earnings per share decreased, which harmed the interests of long-term shareholders. From the results of the case of additional issuance after 1998, the refinancing behavior of additional issuance is not an effective means to improve the performance of listed companies.
2. judging from the impact of the issuance on the stock price, the issuance is indeed a "bad" news for the stock price: the excess return rate before the announcement of the letter of intent for the issuance is significantly negative, indicating that the market responded to this bad news in advance, and investors expressed their denial of the issuance by voting with their feet.
3. The discount rate of additional issuance price can explain the cumulative excess return in the 11 trading days before and after the announcement date, and the influence of different years on the cumulative excess return is also different. This shows that the market's views on stock issuance will greatly affect the degree of price decline.
4. In 1999 and 2, the cumulative excess return rate of the stock price increased after the issuance of new shares, so investors who participated in the issuance could obtain a large price difference before and after the issuance, and there was an obvious arbitrage opportunity. However, since 21, the excess rate of return after the issuance has not been significantly positive, that is, this arbitrage opportunity has gradually disappeared.
5. The analysis of the stock funds of additional companies shows that the average monetary funds owned by additional companies are not significantly lower than the market average, that is, listed companies do not want to issue additional shares because of lack of monetary funds. In fact, due to the restriction of issuance conditions, companies that can often issue additional shares have better performance and financial status, so it is inevitable that the average idle funds of additional companies are higher than the market average. There may be two situations to analyze its engine increase: first, for the expansion of the company's business and scale, it will raise funds through additional issuance to invest in new projects; Second, because the threshold of additional financing is getting higher and higher, it is more and more difficult to succeed, in order not to "waste" valuable additional opportunities.
6. The analysis of the proportion of tradable shares of companies that implement the stock issuance and put forward the stock issuance plan shows that the proportion of tradable shares of companies that put forward the stock issuance plan and put forward the stock issuance plan is smaller than that of companies that do not implement the stock issuance or put forward the stock issuance plan, which shows that the unreasonable ownership structure of listed companies will affect the tendency of listed companies to issue shares. Although it is understandable for a company with a small proportion of tradable shares to improve its ownership structure through additional issuance, it should be noted that in this process, the interests of circulating shareholders should be fully considered, not just the interests of major shareholders, and the main purpose of additional issuance should be to improve the intrinsic value of the company's shares. Especially in the process of issuance, the market risk of stock price is entirely borne by circulating shareholders, so circulating shareholders should have a greater say in the decision-making of issuance.
7. The results of binary choice regression analysis on the tendency to propose stock issuance plan show that the tendency to propose stock issuance plan is different in different industries: information technology industry is more inclined to propose stock issuance plan; Moreover, the three important indicators, return on net assets, debt-to-asset ratio and the proportion of tradable shares, will affect the probability of listed companies proposing stock issuance plans: the higher the return on net assets and debt-to-asset ratio and the lower the proportion of tradable shares, the more inclined listed companies are to propose stock issuance plans.
8. The binary choice regression analysis of the approval of the stock issuance plan shows that the stock issuance plan proposed by companies with high earnings per share is more likely to be approved by the China Securities Regulatory Commission. This shows that the stock issuance plan of companies with higher profitability can be more recognized by the issuance audit department.
don't put all your eggs in one basket.