The Research Of Manipulation Company’s Performance During Reduction By The Controlling Shareholders On China Growth Enterprise Market

Recalling the year2013, Growth Enterprise Market Index rose from705.34to1304.44, which can be described as unprecedented. Because theopening date of the GEM board is in October2009, the peak period oflifting the IPO stocks which held by the actual controller or controllingshareholders of the Company comes in2013. There are31companies onGEM reduced the stock held by controlling shareholders in2013,accounting for all the GEM companies for8.73%. And the reduction ofsome of the company’s controlling shareholder occurred many times.According to statistics, GEM occurred109reduction of events from thecontrolling shareholder in2013. The reduction of the size is quite large.The scale of GEM reduction by controlling shareholder is6.202billion,with an average reduction amount of56.89million yuan each. Since thecontrolling shareholder in the company being a decisive role and having information superiority, the controlling shareholders have the possibility toviolate the interests of minority shareholders. In order to reduce at a highprice, the controlling shareholders have the suspicion to the in the market.In this paper, in order to illustrate the existence of companies’performance manipulation by the controlling shareholders in reductionprocess, select31companies on GEM reduced the stock held bycontrolling shareholders in2013as samples. The theoretical analysis,statistical analysis and case analysis method are taken during the analysisof procedure in the reduction of the controlling shareholders. The paper isanalyzed from two parts. The first part is the statistical analysis of31GEMcompanies, and the second part is the analysis of the specific cases. Thefirst part of the analysis comes to the following conclusions: the highprobability of the reduction of controlling shareholders; little relationshipbetween controlling shareholders’ shareholding ratio and controllingshareholders’ reduction on GEM; the high probability of the reduction ofcontrolling shareholders after the IPO lifted; the more good news than badnews before the reduction of controlling shareholders and the more badnews than good news after the reduction of controlling shareholders; short-term excess returns being relatively large fluctuations after the reductionof controlling shareholders; long-term cumulative excess returns beingnegative after the reduction of controlling shareholders; the highprobability of controlling shareholders’ reduction point being the partial peak stage. The analysis of Avcon Information Technology Co., Ltd. comesto the following conclusions: in order to reduce at a high price, thecontrolling shareholders release a beautiful annual and first quarterly report.There are some suspicion of companies’performance manipulation by thecontrolling shareholders in reduction process.