Information Disclosure, Market Rumor And Income In The Reduction Process Of Major Shareholder

Before the reform of share splitting in china, the assets of the shares of listed companies is highly concentrated, non-tradable shares held by the large shareholders can not be freely transferable in the secondary market, coupled with our relatively weak legal protection of small’ and medium investors, there are many examples that the large shareholders tunneling by acquisitions, asset sales, transactions, free of charge to occupy the capital of listed companies and other ways. After2005, with the reform of share splitting, the large shareholders change their ways of getting revenue. They can reduce their stock to get revenue. Under this context, the large shareholder’s tunneling has new forms and new vectors. In the process of stock reducing, as a controller or insider of the listed company, whether the large shareholder’s behavior violate the principle of fairness and infringement upon the interests of other small and medium investors become the one of the focus of the market.Based on tunneling perspective, this paper uses the way of event study to empirical study the relationship of large shareholder’s excess rate of return, information disclosure, market rumor, and study whether the large shareholders use their information advantage or manipulate the disclosure of the information to tunnel from the minority shareholders. The result show that, there is significantly positive excess rate of return60days before the reduction of holding stocks, but there is negative excess rate of return30days after the reduction of holding stocks, especially the excess rate of return of the largest shareholder is more than the excess rate of return of the other shareholders before the reduction of holding stocks. The study results confirm that the large shareholders, especially the largest shareholder use their informational advantage and manipulate the disclosure of the information to tunnel from the minority shareholders.Finally, according to the results, this paper gives four proposals to promote the large shareholder’s reduction in the principle of fairness, including enhancing the openness of the large shareholder’s reduction, perfecting the information disclosure system of listed companies, strengthening penalties, optimizing ownership structure and strengthening corporate governance.