The Motivation And Restriction Mechanism Of Executives’Share Reduction On Growth Enterprises Market

Since the Growth Enterprises Market (GEM) began to run on October30,2009,there is crowded information of GEM around people. The GEM appeared firstly that the GEM listed companies showed the phenomenon of "three highs". If this phenomenon can be seen as investors’highly expectation for the highly growth of the GEM listed companies, the continued and large-scale Executive’s Share Reduction, as executives’shareholding gradually lifted, have no reason to explain. The reason why public paid much attention to the executives’share reduction of the GEM is mainly two points:one is the executives’special identity; the second is the scale and extent of reduction. About the emergence of the executives’reduction, the widely accepted view is that the phenomenon of "three highs" caused the executives can’t resist the temptation of huge gains brought by the reduction, what’s more, some executives select resign to accelerate the process of stock-to-cash. With interestingly increasing concern, scholars began to study on the phenomenon, which focused in the motivation of executives’share reduction. But its research has the following problems, for example, the size of sample is small; the choice of the motivation is focused on the stock-to-cash motivation. The paper study mainly on two aspects:motivation and restriction mechanism. The result of research is not only beneficial to find the problem, but also to find proper solutions which validly control the GEM.As to the aspect of motivation, the paper was focused on the perspective of risk aversion including the management risk of the listed companies and the market risk of the GEM and stock-to cash, to analyze the executives’share reduction of the GEM. As to the aspect of restriction mechanism, the paper mainly through corporate governance and information disclosure system to analyze the affect of institution. Selecting198GEM companies as the research sample, whose situation of the holding stock performance in whole year is reduction in2010-2012.By using Spss.19as statistical software to run regression analysis, we find that the behavior is affected by "three highs" and the corporate performance, the higher "three highs" is, the more reduction island the same to corporate performance, and information disclosure can appropriately retrain the behavior. Meanwhile, the behavior is negatively related with the size of company and the first major shareholder as executive, but positively related with the ratio of asset-liability. The deficiency of the paper may ignore the internal differences in individual case.The paper is divided into seven chapters. Chapter One, it firstly introduces the current condition and existing problems of the GEM, secondly expounds the theoretical significance and practical significance of topics and finally proposes the idea and manner of this article. Chapter Two, the part introduces foreign and domestic research on executives shareholdings, insider trading and executives’ share reduction so that we can do progressive research. Chapter Three, it introduces the feature of GEM and basic theory related the topic of the paper. This part first elaborates the feature of GEM, including the position and the system. The corresponding system design includes corporate governance and information disclosure. Then, the change of the rule about the executives’share reduction of the GEM is expounded. The second part expounds some theories related theoretical analysis, including the Principal-agent Theory, Insider Trading Theory and Efficient Market Theory. Chapter Four, it introduces the theoretical analysis and the research hypothesis depending on the third chapter. Chapter Five, this part is the empirical design including the choice of indexes, the research model and the filter of data. The index includes explained variable, explanatory variable and control variable, which rely on the starting point of research and the availability of data. The model building is according with the research hypothesis. Chapter Six, this part is the empirical analysis, with descriptive statistics, correlation analysis, multiple linear regressions, test the hypotheses, and finally draw a conclusion. Chapter Seven, The last part is based on the previous theoretical analysis and empirical testing to draw conclusions, and the author puts forward the relevant policies and suggestions for enterprises, government and investors.