Research On Reform Of Non-tradable Share In China

The stock market in China has not only the characteristics of an emerging market but alsothe specific structure of a transitional economy. Since 2001, the stock market has encountered aserious crisis of being overlooked. And A-share market paralyzed the financing and assetallocation functions of a stock market. After countless painful thinking, investors came to realizethat the existence of non-tradable shares, a legacy of the improper decision in China stockmarket early stage, is the root cause which should be solved. As a result, the reform ofnon-tradable share began in May 2005 and achieved partial success.The environment of the stock market in China is so complicated that there are still manyconfusions and unexplored areas in the theory on the reform of non-tradable share. Such lack intheory leads to confusions in practice. Even the confusions prevent investors from having a deepunderstanding about the necessity of the reform and have an impact on their confidence. As aresult, this will have an effect on the development of the reform. And this is not beneficial for usto grasp the direction of next phase reform based upon experiences from earlier phase reform.This thesis results from the above factors.This paper used relevant economic theories and data, combing with China's specifichistorical and structural background, to explain and the cause of non-tradable shares, thetheoretic meaning of the reform of non-tradable shares, the effects of the reform to the marketand corporate governance. This paper also gave some relative propositions in policy.