Factors Of The Market Reaction Strength-Based On GEM Important Shareholders’ Selling Lockups

Since large shareholders、executives and the controlling shareholders’ up-locked shares expired, the Growth Enterprise Market (GEM) have been suffering massive selling, three-high IPO may be an important reason, but the imperfect corporate governance structure, unstable financial performance and the over prettifying of the company in the GEM are also significant reasons.For the important GEM companies, because of the difference in the position of the corporate governance, the numbers of the shares owned and the amount of the shares sold, the market’s response caused by selling up-locked shares is fairly not the same.The factors of the market reaction strength of the GEM important shareholders have always been a hot point in academic and investment communities. However, the GEM was founded just in October 2009, research sample about the controlling shareholders is relatively deficient. The former studies mainly focus on the impact of the executives and large shareholders. As we all know, the controlling shareholders who learn more internal information than executives and large shareholders play an important role in the GEM companies.This thesis, choose the selling up-locked shares of important shareholders from the setup of the GEM to the end of February 2014 as the sample, basing on the theory of supply and demand, the theory of price pressure and the signal theory, calculating the Cumulative Abnormal Return (CAR) after the event of selling up-locked shares. On the other hand, the thesis analyzes the market response in five different aspects, including different holders, volumes, financial performance, valuation and growth rate, and finally achieving the following conclusion. Firstly, the controlling shareholders learn more internal information the executives and large shareholders, according to the signal theory, the market response of the selling up-locked shares by the controlling shareholders is higher than executives and large shareholders. Secondly, the market response is positively related to the volume of the selling up-locked shares, as the supply of the stock is higher, and conveying a negative message to the market. Lastly, some alternation explains are offered for the unapproved hypothesis that addressed reasonable in theory and logic. Shortly, this thesis attempts to find the factors of the market response strength caused by the selling up-locked shares and make a little contribution to this research area in theory and practice.