The Analysis Of The Large Shareholders Holding Reduction Under The Full Circulation

With the completion of the share splitting reform and the lifting of most of the non-tradable shares, securities market of china access to the full circulation, shareholders of the listed companies are no longer divided into tradable shareholders and non-tradable shareholders. In the full circulation, the large shareholders will manipulate the price of the stock, hold reduction in the secondary market and against the interests of the other shareholders for achieving of maximizing their own interests. The specific operation as follows:manipulate performance, private placement in the low price of stock, increase its ratio of stake in the low cost of capital, solid the position, and then through the positive earnings management, inflate profits, raise the price of the stock in order to reduce the holdings in the high-priced for obtaining benefits. At present, the high discount of private placement and positive earnings management provide comprehensive conditions to reduce the holdings of shares for the large shareholders, the innovation of this paper is making the behavior of reduction which combined the private placement and earnings management as a new approach of large shareholders expropriation to research and analysis. This paper propose a series of policy recommendations to solve the problems which occurred during the process of the large shareholders holding reduction, including strengthening information disclosure, strengthening the internal governance of listed companies, establishing and improve the long-effective mechanism of investor protection etc.The empirical study involves two aspects:on the one hand, this paper analyzes the market effects of the holdings reduction of large shareholders. By analyzing the effect of the restricted shares and the reduction to the overall stock market shows that its impact is negative: then the paper uses the way of event study to empirical study of large shareholder’s reduction of holding stocks. The result show that, before the reduction of holding stocks and during the reduction of holding stocks(before the reduction of holding stocks announcement day).there is significantly positive excess rate of return, inversely, after reduction of holding stocks(after the reduction of holding stocks announcement day)the positive excess rate of return is disappears. Such results show that after the reform of the split share structure, the large shareholders in the process of the holdings reduction still be able to infringe upon the interests of the other shareholders, the way of the large shareholders to against interests has transferred from listed companies to the dual control of listed companies and securities markets gradually. On the other hand, this paper analyze the specific mode of operation on the holdings reduction of large shareholders, such as the relationship between the private placemcnt(reducing costs) and holdings reduction, the relationship between the earnings management (increase revenue) and holdings reduction. In the full circulation, the large shareholder’s interests are directly associated with the price of the stock in the secondary market, shareholders attain the benefit through a large number of holdings reduction directly. Therefore, in the current situation, the violations of the large shareholders more perform of buying in the low prices and selling in the high prices, so that they can attain the benefit and control the position at the same time. The large shareholders often tend to hold the shares at low prices through the private placement of high discount, while reduce the shares at high prices through the positive earnings management.The article is divided into five parts, each part is as follows:the first part is the preface, introducing the research background, significance and the review of relevant literature, the research framework, the main contributions and shortcomings; the second part is the summary of the reduction behavior and painted the whole process from the private placement to reduction of holdings by some classic cases; the third part is the design of research and selection of methods, combined with our special background, put forward the hypothesis of this article, selection of the sample and the method, explanation of the variable definitions; the fourth part is the empirical test of structural model using Eviews6.0software, analysis and processing the data, test the assumptions in this paper, explain the empirical results; the fifth part is conclusions、 policies and proposals, on the basis of summing up the main conclusions of the paper, it pose theoretical explanations and put forward policy suggestions.