Controlling Shareholders Stake-raising: Analysis On Announcement Effect And Influencing Factors

The largest shareholder behavior of listed companies has been the focus of research.In the domestic research, scholars focused on the research of related transactions againstthe interests of small investors, but the research on largest shareholder’s transactions in theSecondary market is less. In2008and2011, our market entered a Big-bear market. Thebasic functions of the stock market confronted a strong challenge and investor confidencefell into the bottom. In such circumstances, relevant government departments haveadopted positive measures, shareholders and executives of more than300listedcompanies published holdings announcement in a short time. Because of its particularity,special ownership structure of listed companies of ours and its positive significance, makethe research has special meanings.At first, this paper introduces the background of these two incidents and relatedpolicy. In the literature review and related theory, reviews Insider trading and its marketefficiency, then analysis holdings effects of signal theory and the holdings motivationunder the framework of repurchase. In empirical research, we choose221samplecompanies which publish the holdings announcements between2008.8to2012.1.By theEvent Study, we find the Announcement Effect performance Positive abnormal returns,Three-day total abnormal returns is2.41%.before the announcement, the CAAR of thesample companies is negative. But the CAAR Soon becomes positive after theannouncement, and there is a strong persistent. At the same time, in order to study thenature of the controlling shareholder works announcement abnormal returns, we classifycompanies into state-owned and non state-owned companies by the nature of the ultimatecontrolling party; we find the CAAR of state-owned listed companies is much larger thanthe non-state-owned listed companies, but beyond that we expect is the CAAR(-20,20) ofnon-state-owned is negative.When we research the Influencing factors of the Announcement Effect, we found noobvious relationship between the company’s stock price short-term CAAR andunderestimate the value, profitability, but the Effect, the holding amounts andshareholders properties has positive relationship, the CAAR before Announcement hasnegative relationship. At the end, we learn from Cash flow hypothesis and Undervaluedhypothesis, use data of the financial indicators to empirical analysis, we find stake-raisingis for both political purposes and financial motivation. Market reaction and behavior of Controlling shareholder holdings provides newevidence for the largest shareholder in emerging markets. Meanwhile, for investors,management and controlling shareholders of operation is also a useful reference.