Study On The Equity Division Reform Proposal And Performance

Securities market of China has been in an abnormal state for a long time in the aspects of structure and functions. The basic institutional cause is the split of shares. This was exhibited in: State-owned shares and corporate shares that can't circulate are highly centralized but the public owned shares that can circulate only account for a few proportions of the total shares. The split of shares do harms to China's securities market seriously in many aspects, with the development of China's stock market, the split of shares has become the greatest obstacle to the further development of the stock market. The China Securities Regulatory Commission announced the launch of the experimental reform of the equity division in April 29, 2005. To date, the process has run smoothly and drawn to a close. This paper was based on this background, through the combined use of qualitative and quantitative methods, made more comprehensive and in-depth study on the proposal and performance of equity division reform.In view of the equity division reform proposal, this paper used multiple linear regression to research the affection of financial and equity structure index to the consideration of listed companies, in order to find the real factors affecting the consideration. The results manifested: the first non-circulating shareholder's shareholdings have a positive correlation with the consideration; the proportion of circulating shares and institutions holding shares and EPS have a negative correlation with the consideration. Comparing with the financial index, the equity structure index of listed companies has a greater impact on the consideration.In view of the performance of the equity division reform, Events Study and accounting research methods have been applied to the empirical analysis of the market performance and financial performance of listed companies after the equity division reform. The results showed: the listed companies launched the equity division reform earned the cumulative average abnormal return(CAR) which have statistical significance during the inspection period, this also means that investors have benefited from the equity division reform; Companies with high consideration brought more benefit to investors than companies with low consideration; Main Board companies shareholders acquired more CAR and the SME Board companies shareholders did not receive any CAR basically; In the short term, The listed companies which completed the equity division reform was not improved in financial performance. Therefore, after the completion of the equity division reform, the listed companies should focus on improving corporate governance to enhance corporate value through reducing state-owned shares and executing management equity incentive plan.