Study On Market Response To Corporate Control Transfer

Since the non-tradable shares reform began, great changes have taken place inour capital market. Gradually, non-tradable shares trade gradually in the secondarymarket, stocks change into the one that have the same prices and equal vote rightsfrom the same shares with different prices and unequal rights. At the same time,corporate control transfer cases continue to increase, especially the transfer modeshows a variety of gestures. The acquis ition of two class market bidding and tenderoffer that trade through the secondary market become more and more often.Therefore, it is very important to research the new features of market response tocorporate control transfer after the non-tradable shares reform, especially to explorethe factors affecting the market reaction, in order to regulate the development of themarket for corporate control.First, this paper distinguished merger and corporate control transfer, thendefined the object of this thesis was the companies whose first large shareholderchanged. This includes two styles, one is that the first shareholder changes becauseenterprises merger between two companies and the other is that the first shareholderchanges in the same company. Second, this paper studied the market reaction to thecontrol right transfer by using the method of event study, which selected the listingcorporation first announcement date of control right transfer for the event day,selected the event days before and after20days as the window period, calculatedCAR in the window period. The result is13.5%. In the window period, CAR hasshown a growth trend. Before the event, CAR increases rapidly. When it reaches theevent, it gets the maximal speed event. After the event, it continues to increase butthe speed slows down, showing a gradual trend. It indicates the existence ofinformation leaked ahead of the situation and the transfer of control information hasbeen digested before the event. To study the factors that influence the marketresponse to corporate control transfer, this paper used the multiple regressionmethod to test the five hypotheses. Empirical results verified that the companies thatchange industries, change senior executive, have high transfer price/secondarymarket price, change senior executive ownership and pay in cash have higher excessreturns. Because our control market is not mature, the number of the transfer ofenterprises is too little, people do not understand the transfer, the transfer of thishypothesis has not been verified. At the same time, the empirical result showed thattransfer price has the greatest contribution to the equation. It reveals the sensitivityof transfer price in the market response to corporate control transfer and providesguidance for the control market regulation and supervis ion direction. Last, this paper proposed relevant countermeasures from the government, corporate and individualinvestors to promote the development of the corporate control market.