The Impact of Private Equity Financing in Chinese Market

Zhiyao Lin ()
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Zhiyao Lin: The Chinese University of Hong Kong, School of Business and Management

A chapter in Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022), 2022, pp 1483-1488 from Springer

Abstract: Abstract This paper uses A-share listed companies' private equity financing events in Shanghai and Shenzhen stock exchanges from January 2010 to December 2019 as a research sample. It calculates the cumulative excess return of the corresponding stocks. Combined with the method of event research, this paper explores the impact of private equity financing events on excess returns. Overall, the cumulative excess return rises during the ten trading days before and after the event. The increase is particularly pronounced. This result also shows that the announcement of a private equity financing of such information can be quickly reflected in the price of the listed company's stock, thus reflecting the semi-strong market effectiveness of China's securities market to a certain extent. In addition, this article will also divide companies by industry type, ROE, book-to-market value ratio and research these multiple possible factors that may affect the cumulative excess return. The research may contribute to stock selection for investors and portfolio construction for managers.

Keywords: Event study; Alpha return; Private equity financing; Market efficiency; Behavioural finance (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-036-7_220

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DOI: 10.2991/978-94-6463-036-7_220

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