In recent years, Chinese listed companies in A-share market exhibit significant preferences for private placement in seasoned equity offering. On the basis of summing up the research literature and selecting 2006—2012 data of Chinese SEO companies in China’s A-share market, this paper makes an empirical analysis on the factors of SEO options from the perspective of investor sentiment and tunneling. The empirical results show that the more depressed investor sentiment，the smaller tunneling effect of public SEO, and the greater tunneling effect of private placement. Therefore, the listed companies prefer private placement. Otherwise, the listed companies prefer public offering. When China’s stock market continued to fall, and the investor sentiments continue to fall, the listed companies turn to private placement based on large shareholder tunneling, which is a rational choice. The conclusion of the research is of great significance for regulating the financing behavior of listed companies in China and playing the role of capital financing in China’s stock market.