The Study On Special Treatment System's Warning Function

From 1998, when the financial circs or other circs of the listed company become worse, Shenzhen Stock Exchange and Shanghai Stock Exchange will take special treatment to the company. Special treatment system actually is some kind of transitional procedure before exiting the stock market. It essentially reminds the investor and the listed companies that the company's financial circs become worse. When the company receives special treatment, it is probable to stop the trade or exit the stpck market. So it reminds the investors to be cautious to invest in the stocks and gives warning to the companies to improve their management. In the Chinese stock market that is a burgeoning market, the special treatment system needs further development. This article studies whether the special treatment system has warning function to the investors and companies and whether the system is effectual.From the point of view of the investor and the listed companies, this article studies warning function of special treatment system to the investor and the listed companies respectively with the method of event study and cases study. There are 6 chapters in the article.The first chapter briefly introduces the train of thoughts, the content and the frame of the study. The second chapter reviews the domestic and overseas literature. The third chapter introduces the developing course of special treatment system, and sets forth the concerned concept. How to exit the stock market in other stock market is also introduced and compared with our stock market in the Chapter 3. Chapter 3 provides the background to the theoretical and empirical study. ST stock price's reactions to ST announcement from 1998 to 2004 are studied with the method of event study in Chapter 4. Average excess yield in the window (-20, +20) and accumulative excess yield in several windows are calculated and compared in different years. It plays a certain warning role to the investors. Chapter 5 sums up the means of restructuring of the assets and debts with the stocks specially treated in 1998. It includes affiliated trade, the subsidy from the government, the replacement of assets and the restructuring of debts. These ways can help the listed company to realize making profits in a short time, but unfavorable to training itscompetitiveness. Then we use Beaver's single variable model to analyze the financial situation of the companies repealing special treatment. Thus we draw the conclusion that the effect of special treatment system is very limited, whether analyzing from the way of repealing special treatment or current financial situation of the companies. Chapter 6 makes suggestions to special treatment system and the relevant system.