The Research Of The Stock Price Impact Of Managers’ Increasing Share Holdings In Growth Enterprise Market

Compare with main board, the GEM mainly focuses on the middle andsmall companies in emergency industry. Since the listing threshold is lowerthan the main board, while management risk is higher. At present, it’s not somuch for the domestic research on share holdings increased by managers.However, with the laws and regulations liberalized to holdings of executives’restrictions, the value of this kind of research will gradually come out.Different from existing research: first, this study is the Chinese mainlandsecurities market, while lies in an emerging market. The western maturemarket research cannot fit. Second, the existing researches are investigatingin the short-term (1month and1day after the announcement). This paperbelieves that the relevant regulations banned executives sell after they buytheir own companies’ stock within6months, so the increasing holdings ofexecutives represents the long-term behavior of more than6months; Third,executives have a good understanding of the company’s business operation,but they don’t know the capital market very well, their increasing holdingstend to reflect the company’s future profit growth.This paper proposes4hypotheses, using the typical samples from the2009to2013holdings increased by executives. After an empirical study onthe sample data, some hypotheses were confirmed, some be falsified.The conclusions are as follows: the GEM executives increasing holdingstransfer medium and long-term positive signal to the market, the stock price is expected having absolute positive returns in6months after theannouncement,1years is the same, but in the short term (1months after theannouncement) have no significant absolute positive returns. Increasingholdings of executives itself does not have an obvious stimulation on thestock price, but tend to reflect the business going better in most cases. Afterthe announcement, cases also happen that net profit slowdown or evendecline, mainly due to the size of the company already very large, or theimprovement will show in second or third years, strong cycle industry overalldownturn dragged down the company etc.. From the long-term (more thanhalf a year), stock price and company performance have positive correlation.The increase holdings of executives reflect the good business performance,and finally reflect to the stock price.Finally, the paper puts forward the following suggestions:1, building aGEM executives’ absolute return portfolios, and for long-term investment likemore than half a year, it will assure you that the portfolios can obtain theabsolute positive returns rate.2, the long-term stock price and companyperformance is positively related, therefore in the screening executives’increasing holdings, you should carefully study the industry fundamentals,company competitive power, the future development of the company, toselect outstanding companies.3, increasing holdings of executives itself doesnot have an obvious stimulation on stock price, only represent the company’sfuture development. but also needs other elements, for example, the cost ofcapital, the macro market style, even technical analysis.