Based On Market Reaction To Insider Trading, The Structure Of The Shares Of The Outstanding Shares Split The Reform Of The Empirical Research

In this article we start from the historical background of non-tradable share reform, and analyze the reason why split share structure occurs, the impact on Chinese security market, and the effort the Chinese government and supervised authorites has exerted to solve the problem of splitting share structure. In the following paragraphs we bring forward the start of non-tradable reform and its positive impact.Secondly, this article examines the sample of pilot companies to whole market reform to test the market reaction and the problem of insider trading. The results show that there exist serious actions of rights seizing when the companies were announced as the reformed companies and the problem of insider trading. Among these, the rights seizing problem of reformed companies from Shanghai securities is more serious than that from Shenzhen securities, the problem of companies from small and middle sized board is more serious than that from the main board, and the problem of companies from high compensation package is serious than that from low compensation package. In the event window of the passage (carrying out) of compensation package, there exist the phenomena of over reaction. We also conclude that the average cumulative abnormal return (ACAR) of the whole reform process is uncorrelated with the achievement of the companies, this shows that the investor do not care about the future development of the reformed companies. ACAR positively correlates with the level of compensation packages and the cumulative ratio of the floating share holders and negatively correlate with the difference of average price to net asset of the companies, the last correlation shows that the floating share holders care about the historical cost of the non floating share holders. Thirdly, we view the heterogeneous share structure as the players with differentinterests in the frame of game theory, and investigate the impact of individual investor, funds and the QFII on the package level, the amendment of compensation package,the size of amendment and the vote ratio of the floating share holders of the reforms. We find that: (1) the more the fund hold, the lower the compensation package, the lower probabilities the amendment of compensation package, the lower the size of amendment, the lower the vote ratio of floating share holders. If the ratio of holdings the fund holds increases one percent, the vote ratio will increase by 0.91 percent. (2) there exists weak positive correlation between QFII hold ratio and compensation levels, and we do not find evidence to show whether the non tradable share holders cared about the QFII hold ratio when decide to amend the packages. QFII ratio did not impact the size of the amendment. Although the QFII ratio has positive correlation with the vote ratio in the meaning of statistics, but it do not in the meaning of economics. If the hold ratio of QFII increased one percent, the vote ratio will decrease by 0.84 percent. And (3) the more the individual investor hold, the higher the package level, the lower the probabilities of amending the packages, the higher the size of amendment, and if the individual investors holds one more percent, the vote ratio will decrease by 0.88 percent.