International Journal of Management, Economics and Social Sciences
2020, Vol. 9(4), pp. 271 – 285.
ISSN 2304 – 1366
DOI: 10.32327/IJMESS/9.4.2020.14


Measuring Announcement Effect of Refinancing: Evidence from Chinese Public Utility Listed Companies


Ziyi Zhang1
1College of Civil Engineering, Oregon State University, Corvallis, Oregon, United States



Refinancing is generally regarded as a major financing source of Chinese listed companies. The purpose of this study was to investigate the capital structure from the perspective of increment by measuring the announcement effect. This study identified 110 public utility firms listed on the A-share stock market. Using the event study methodology, this study implemented empirical analysis on the announcement effect of three refinancing modes i.e., secondary equity offerings (SEOs), issuing ordinary bonds, and issuing convertible bonds, measured by the abnormal returns. This study discovered that SEOs had a significant negative announcement effect, issuing bonds had a significant positive announcement effect, and issuing convertible bonds had a negative but not significant announcement effect. Our results indicated that SEOs are associated with negative market reactions and issuing bonds convey positive signals to the markets. These findings were similar to prior studies on the Chinese stock market as a whole in term of signs but are different in term of magnitudes.

Keywords: Public utility company, equity refinancing, debt refinancing, announcement effect, capital structure
JEL: G14, G32