A Study On Market Effects And Time Of Restricted Shares Reduction

It is absolutely astonishing that the price of the stock market has been fluctuating sharply in the recent years. The driving force of this fact is the Split-share Structure Reform, which is featured with the Chinese characteristics. The success or failure of the affair is all to such reform: it brings the unprecedented big bull market for the Chinese stock market, yet it also brings immense restricted share pressing the Chinese stock terribly. Would the restricted share suppressing the stock market seriously? Many domestic scholars started to study on this topic.In the accomplished studies, scholars mainly take the share reform and the unlocking of the restricted share as the study object. This paper takes the share reduction after the unlocking of the restricted share as the study object to analyze and study the share reduction from the three aspects of share reduction time, market effect and the reasons of the share price falling after the reduction.First of all, this paper analyzes the reduction time of the restricted share by taking 16 variables in the three classifications of reduction features, company operating status and market quotation. The result shows that the variation coefficient between the unlocking and the reduction feature and the market quotation are the most significant, which indicates that the time of the reduction more depends on the current situation and the market effect of the unlocking and reduction of share.Secondly, this paper analyzes the market effect of the restricted share reduction by the event study method. The empirical result indicates that the share price rises to the highest point in a short time before the announcing day of the share reduction; the share price falls after the reduction completed with obvious down trend; the share price goes back to normal level in days after the reduction and the reduction does not cause the long-term share price falling. This paper gives a result that it is common and evident that share holders raise the share price using their resources to maximum their reduction gain.Thirdly, this paper analyzes the influencing factors of the share price falling after the restricted share reduction. The result shows that the main cause of the share price falling is the market quotation, which is the general trend of the stock market. For the degree of the share price falling, the main cause of the sharp price falling is the share reduction and the proportion of the reduction in total, which indicates that the share is the same as the commodity that its demand curve is downward sloping affected by supply-demand relation.