Study On Influencing Factors Of Restrictetl Shares Decreasing

China’s multi-level capital market has greatly developed and improved in recent few years. Small and medium sized enterprises board and growth enterprises board have been established one after another. After seven years of development, SME board’s total market capitalization has already accounted for40%of the total market capitalization of Shenzhen. GEM board’s market capitalization has grown to750billion in less than two years and accounted for9.5%. However, frequent reducing behavior has arisen in SME board and GEM board since the end of2010. This article made trend analysis and found that shareholders’ reducing on SME board had a significant rise from2007to2010, while the reducing on GEM board had increased more from2010to2011with the release of restricted stock. What’s more, data shows that the accumulated lifted shares of SME board and GEM board will respectively account for16.52%and47.93%of each board. Considering increasing reducing behavior and the great potential reducing pressure, it is necessary to study the influence factors of shareholders’ reducing so as to control the impact of reducing in the future.This object of this study is shareholders’ reducing behavior on SME and GEM board, with the purpose of inspecting the influencing factors. This study primarily used empirical research method, supplemented by normative research method. This article firstly reviewed and summarized related literature and theory, meanwhile made hypothesis based on this, including the corporate performance, equity structure, and corporate governance and so on. Then the paper proved the hypothesis through trend analysis, correlation analysis and regression analysis.This paper effectively complemented existing literature on shareholders’ reducing behavior, and introduced the variables represent corporate liquidity, forecasting earning and stack market performance. The empirical results shows that the stock reducing proportion of the sample enterprises’ shareholders has significant positive correlation with shareholding percentage before reducing, and significant negative correlation with corporation’s performance, liquidity, share balance degree and stock market performance. This paper tried to prove whether big shareholders invade small and medium shareholders’ rights, but the study results didn’t show significant relation between them. Meanwhile, independent director proportion has no considerable affect on reducing behavior. Based on the study results, this paper provided suggestions in respect of law, tax and supervision. Particularly, formulate tighter restriction on big shareholders, collect tax on single large proportion reducing, and strengthen the supervision over independent director. What’s more, another effective financing channel should be set up for SME to prevent the shareholders from selling stocks for the liquidity purpose.