| After the global financial crisis,the stock price crash,as an important factor,has come to the eyes of professors in finance sector.Stock price crash is a situation that the return of a stock becomes extremely negative,which causes a lot harm to both the investments'ealth and the development of market.During the share crash,starting from May 28,2015,the index decrease by 6.5%,and more than 2 thousand of stocks decrease to the fall stop,which cause a loss of 2928.3 billion in market value.Besides,the CRRC stock decrease by 18.15%in two days,hich causes a loss of 134.6 billion in market.So I use the panel data of all companies in A-share market in 2006 to 2016 to analyze the influence of the allocation of the insiders control on the operation,hiding information and the insider trading during the three stages of collapse in stock price.Based on this,this article provides some advice about developing the corporate governance structure,reducing the risk of collapse in stock price,and investment.This article contains 4 sectors.In the first part,I divide the collapse in stock price into 3 stages,then the bad news arises,hen the bad news is hided,andhen the bad news is published,respectively.While in the first two stage,the price of stock deviates from the true value gradually,and the risk of collapsing in stock price is arising.hen the bad news is published,the price of stock plummets,and the crisis is happening.During the first two stages,the corporations' business decision and management mechanism influence the corporate results,and also the motivation and difficulty of insiders‘to hide the bad news.Meanwhile,I select the concentration of actual controllers,control power,equity balance degree,the separating extent of ownership and controlling right,ownership property,and institutional investor as the five dimensions to represent the allocating of the insiders control.In the article,the different combination of the five dimensions means different form of the allocating of the insiders control,and I analyze how the allocating of the insiders control influence the risk of collapsing in stock price based on the 3 stages of collapsing and the current situation of the corporations in China.In the following three parts,I analyze the influencing mechanism about how the allocating of the insiders control influences the risk of collapsing in stock price during different stages.In the second part,hen the bad news arises,insiders,as the core of enterprise management decision makers,have great control on the decision for companies' investment decision,risk taking,financing decisions,and associated business.This means that the higher the concentration of control of controlling shareholders,the lower risk of collapsing in stock price,through reducing excessive investment and the inefficient investment scale,and developing the efficiency of management.So this factor has positive effect on governance.hen the separating extent of ownership and controlling right becomes larger,the major shareholdersill have exacerbate motives of hollow the corporation,leading the larger inefficient investment scale and the more associated business.At last,the risk of collapsing in stock price becomes higher.So,this factor has the negative effect on governance.The ownership property can adjust the influence of control configuration on the management decisions and the risk of collapse.Besides,the two kinds of effects above is more outstanding in the non-state-owned enterprises.In the third part,I analyse the ability and motivation of the control shareholders and important shareholders to hide the information during the periodhen the bad news is hided,because of the higher concentration of shareholders of the corporations in China,and the greater control power of the control shareholders.In this paper,the detailed research is conducted on the equity pledge,which is a general financing method.hen the equity pledge causes the control right shifting risk,the extra collateral risk and theealth impairment risk,the pledge shareholders have the motivation to manage the risk of collapsing in stock price.This part studies how the insider control configuration influence the pledge shareholders' choice to manage the stock price crash risk,and the influence of this method.The result shows that,the controlling shareholders' control concentration is higher;the pledge shareholders' motivation to manage the stock price crash risk is stronger,by hiding information and earnings management.Meanwhile,after lifting equity pledge,the return of the stock price crash risk is higher,showing that this factor has a negative effect.In the face of the equity pledge,the controlling shareholders,ho are under the condition of two rights separation is higher,also have the motivation to manage the stock price crash risk.But their main methods are active management and improving the companies'performance.Therefore,the return of stock price crash risk does not exist after equity pledge,showing an active effect on governance.Also,the two kinds of effect is more outstanding in the non-state-owned enterprises.In the fourth part,this paper mainly studies that the insiders become the informed traders in the markethen the bad news is published.According to the rational expectations theory under the framework of incomplete information,the tradersith the private informationill profit,and the private informationill be passed in the capital market.Due to the low limit of inside shareholders,private informationill not be passed on to the asset price totally.Based on this,this part analyze the motivation of inside trading is based onhether the inside tradingith private information or the arbitrageith the published information,and the influence of control configuration on the motivation of the inside trading.The results show that insiders' selling trade has negative correlationith corporate performance,and this correlation is stronger in the corporations that have higher concentration of controlling shareholders.At the same time,insiders' selling tradeill increase the risk of collapsing of stock price,and has the negative influence.In addition,institutional investors hold higher shares in the company,insiders' selling trade have positive relationith the stock price crash.In the companyhich the institutional shareholders hold the higher shares,after the controlling and major shareholders' selling,institutional investorsill sell more,hich make the situation more serious,having a negative effect on governance.The two kinds of effects above are all significant in both state-owned enterprises and non-state-owned enterprises.Based on the above conclusion,this paper tries to study that how the insider control power configuration influence the stock price crash risk,and get the following conclusions.First of all,the controlling shareholder control concentration has the positive effect on the stock price crash risk in corporations' management.Under the condition of equity pledge,the concentration of control power has a negative effect on the stock price crash risk.In terms of insiders' trading,the concentration of control power has a negative effect on the stock price crash risk.In short,the concentration of controlling shareholder control power has a negative influence in the stock price crash risk.Secondly,the two rights separation degree has a negative effecthen the company is in face of the stock price crash risk.hen buying the equity pledge,the two rights separation degree has a positive effect on the stock price crash risk.In short,the two rights separation degree have opposite effect on the stock price crash risk in the two stageshich can be offset,so this factor has no influence in all.Thirdly,the ownership property can adjust the above two factors,they are all more significant in non-state-owned enterprise.Fourthly,the institutional investors have an amplifying effect on crash risk.This article not only enriches the study of factors affecting stock price crash risk,but also analyzes the influence of corporations' control right allocation in the governance of stock price crash risk.The conclusions in this article help people to understand the importance of corporation control right allocation both in corporate governance and in capital market.Besides,the findings are also helpful for people to know how to establish a more effective control right allocation structure,to protect market against stock price crash risk,and to improve the environment in capital market. |
PDF Full Text Request