| 1. Background of the studyFor a long time, the government has taken the issue of stock and going public as an important approach to saving state-owned large and medium enterprises. As a result, so account for most of china's listing companies. At the beginning of establishing security market, in order to keep the controlling status of public ownership system and being afraid of the lose of statement asset, the stock share of the listing companies are divided into state-owned share, legal person share and negotiable share, among which the former two are not tradable. This leads to the great difference of the stock ownership of listing companies have the following characteristics:(1) complex structure and bad circulate; (2)state-owned shares have little descend (3)the proportion of non-tradable shares decreases slightly;(4)the proportion of legal person shares decreases;(5)the proportion of tradable shares are stable.The separation of stock share ownership affects china's stock market as follows:(1)bad financing;(2)the loss of pricing mechanism;(3)the loss of stock market's function of allocating resources;(4)the macro-economy has close connection with the fluctuation of stock markets, but it is not true for china.Got the approval of state council, on April 29th, 2005, China Securities Regulatory Commission issued the notice on the relevant problems about the trial shares-trade reform.Shares-trade reform will significantly affect the capital market in every aspect. As professor WUXIAOQIU said,"The capital market is being reconstructed."Stream of thoughts and contents of the paperThe main idea: analyzing the effect on the price of listing companies'stock, caused by the reform. As we know, the price of listing companies'stock is mainly decided by the intrinsic value of the company and supply and demand of the stock. The paper tries to analyze the effect on the price of listing companies'stock, caused by the reform.The effect on listing companies'intrinsic valueAccording to the economic theory, the stock price is the appearance of company's value, and the price fluctuates up and down the company's value.In mature market, the advance of company's intrinsic value will lead to a stock price climbing and the decrease will bring about a drop.I. Effect on company's governance mechanism.Generally, there is internal governance mechanism and external. The latter includes three aspects: the market of controlling, legal system and protecting the right of investors, and the degree of competition in product market. The former includes the board of directors, the management team's wages, the stock ownership structure, disclosure of financial information and transparency.II. Effect on the structure of stock ownership.The scholars at home and abroad mainly focus on two aspects: the concentration degree of stock ownership and the stock owner.III. Effect on the concentration degree of stock ownership.Most of the scholars hold that there is an inverse U relationship between the concentration degree of stock ownership and company's performance. After the reform, the consideration will affect the biggest shareholder greatly. According to every 10 shares getting 3, the average proportion, the biggest shareholder's share will decrease from 60% to 47%. The reform will be helpful to tackle the problem that the state-owned shares are the"lion's share".IV. Effect on the big shareholder actionAfter shares-trade reform, there is the same interest flat roof and aim in all shareholders. It is good for protecting the interest of small shareholder.V. Effect on the listing company controlling marketThe theory of company controlling market says, the company which makes its stock price highest can be exist in the market when the take-over mechanism exist and work. Outer leash of company managing is mainly focus in controlling market, especially in contesting the right of controlling. Controlling market promote company manage efficiency, avoid bad manager and betraying the shareholders. The controlling right of company will transfer, when the manager had not operated the company well and lead company stock price descend. When controlling right trade by lots ways, market will be form by merge, purchase and so on.Before share-trade reform, our listing company merging own the following characters: (1)merge way is mainly in agreement;(2)merge motivation is finance merge;(3)payment way is using cash;(4)the government is the main body.After share-trade reform, china controlling market will go into a new"merge times".After share-trade reform, there are many reasons for controlling market flourish. (1)capital market is the best finance source for company, they can use it growing up quickly;(2)capital market is the best flat roof for propagandizing the listing company, china market will become a part of international capital market;(3)stock price will more truth. This can help purchaser evaluate the company true value;(4)purchase the listing company become more easy;(5)shares can be deal more easy;(6)merge tidal wave will set in, when macro-economic go into descend times;(7)there are more ways to purchase a listing company, for example exchange shares will be used.VI. Effect on listing company ESOWe should do following relationship well, when we deal with company consign-substitute. First, right and obligation should be corresponded. Second, the manager's income should consider his contribute but not fastened. Third, shareholder should have the right to chose and supervise managers. Finally, shares should be some concentrate.The conditions of listing company doing ESO mechanism have maturated.VII. Effect on supply and demand of listing company sharesIn the background of plenty of capital, shares-trade reform change the construction of company shares owner, promote the company investment value, the speed of IPO have increased, bloom the capital products, add the products for investing.From April, 29th 2005 to April 2007 the integrate index almost increase 2 times.Validate the market and share-trade reform by theory and practice. By practicing analyst, share-trade reform optimize the market, add the company value, attract lots of capital flow in, increase the price in some degree, but it is not distinctness.2. Main contributions or innovation(1) Combine the theory with the practice. It analyzes the reform's effect on stock price theoretically, then designs model to explain the fluctuation of stock price in reality.(2) The reform paves the way for the establishment of incentive mechanism in the listing companies. The paper poses the relative comprehensive index option in view of the establishment of incentive for the higher management. |
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