Research Of The Price Pressure Of Restricted Stock Circulating

The circulation of restricted stock is a emerging and hot spot of China's market. Since the year of 2005 when the non-tradable share reform begun, the price to pay for the circulation and the initial public offering after that has formed enormous quantity of restricted stocks. Accumulated circulating stress gives investor tremendous impacts, especially the expansion anticipate may has stress to the stock price, conditions the rising market, and enlarges the falling extent.Firstly, this paper analyzes the price pressure from the circulation of restricted stock by theories. And then it makes a comparative analysis on 228 sample cases of restricted stock circulating in groups, finds out different pressure performances in different conditions through the trend of accumulated profit before and after the circulation. And this paper structures multiple linear regression models using the event study method and multi-factor model, considering the difference between circulating pressure of event groups as basic factors.The results of regression analysis validate the conclusion from the event study. The pressure depends mostly on some stock supply index such as the quantity of circulating, the size of capital stock etc. The selling pressure is relatively small for good performance companies. And some valuation index such as Price/Earnings Ratio, Book Value/Market Value Ratio etc. have certain influence on the pressure of restricted stock's circulation. It's illuminated that valuation factor plays a role in the process of circulating pressure shows. In the end, the paper gives some counter-strategies for the problem of restricted stock circulating according the results of empirical studies and the analysis of the price effect in this process, and considering the present security market situation in China.