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| Research on the Influence of Diversification of Private Placement Companies on “SEO Performance Puzzle” |
| LIU Chao，SONG Xin，GUO Lifeng |
| 1.Nanjing University of Finance and Economics, Nanjing, China; 2. University of Shanghai for Science and Technology, Shanghai, China；3. Beijing Offcn Education and Technology Co., Ltd, Beijing, China |
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Abstract Using firm-level data of Shanghai and Shenzhen A-share listed firms of private placement from 2007 to 2019, from the perspective of diversification, this paper analyzes the reasons of the declining performance of private placement enterprises. The results show that ①Enterprises have a significantly higher degree of diversification after the private placement, and this trend is more pronounced in non-state-owned enterprises. ②The diversification of private placement enterprises after financing will not only increase the financial risk but also lead to a decline in corporate performance. ③Further study reveals that the opportunist motivation of major shareholders and the overconfidence of management are the main reasons for the diversification of enterprises. In addition, private placement enterprises are more inclined to get involved in non-related industries and industries supported by industrial policies through diversification after private placement.
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Received: 02 May 2021
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