Why Institutional Investors Prefer Listed Companies Whose Major Shareholders Sold Down Their Shares

What causes the investment chaos which occurred at the beginning of 2015? Why the institutional investors prefer the listed companies whose major shareholders sold down their shares? The more confusing thing is that these companies’ stocks outperform the market index. In order to explain the strange phenomenon, we collected date from May 2012 to May 2015 around “New State Nine” and began our research from the major shareholders’ selling down behaviors. We found that the major shareholders and institutional investors occupied the interests of external investors through market value management. Major shareholders selling down their shares aimed to transfer their stocks to the institutional investors instead of obtaining abnormal return. We examined influence of “New State Nine” on the co-operations between major shareholders and institutional investors. We found that “New State Nine” promoted the collusion between major shareholders and institutional investors, and the market atmosphere had nothing to do with the collusion.