A Study On The Market Reaction Of The Transfer Of Control Rights In China 's Listed Companies

Chinese security market was established since1990s, and it is driving to maturity step by step after20years development. In July1993, the "Bao-Yan event" marked the foundation of Chinese control right transfer market. This event makes people realized that the security market is not only for speculation, but also for the distribution of resource. Security market plays a more and more important role in the modern economic society as an equity market. Scholars are doing more and more researches as the development of the control right transfer market. So it is of great significance that conducts specific study on the market reaction over the transfer of control of Chinese listed companies.This paper used the event study framework, took134Chinese listed companies whose control right were transferred during2006to2012as sample companies. Firstly, to study the market reaction of the overall sample, then classify the overall sample according to different standards:1.different years,2.different transfer method,3.different controlling way,4.different shareholding ratio,5.different separation of two rights. Finally, to study the long term market reaction of the sample companies of2008.The research showed that the control right transfer of the overall sample produced a positive cumulative abnormal return to the target companies. Form the result of the study over the samples of different years, it shows leakage of information before first notice date in a certain degree, especially from2008to2010.Form the result of the study over the samples of different transfer method, it shows that control right transfer of all of the three method produced a positive cumulative abnormal return to the target companies, especially the negotiated deals, and then secondary market purchase and voluntary conveyance.Form the result of the study over the samples of different controlling way, it shows that control right transfer of either state-owned holding or privately controlled, produced a positive cumulative abnormal return to the target companies, especially the privately controlled companies.It shows that different shareholding ratio and different separation of two rights do also have an influence on the market reaction of the target companies. Adequate amount of shareholding ratio and adequate degree of separation of two rights will do good to the market reaction of the target companies. In the long term, control right transfer also produced a positive cumulative abnormal return to the target companies, create value for the companies, especially in the first three years.