The Study Of Senior Managers’ Sales On Growth Enterprises Market

Since the GEM first went public, the market has witnessed large amount of senior managers from GEM listed companies who sold their stock or resigned. This thesis studies sale of senior managers from 2009 to 2014, trying to find whether or not senior managers use private information during their sales from a perspective of insider trading. Firstly the reason for their decision to sell stocks is analyzed to see whether or not senior managers used private information to evaluate companies. Secondly, the abnormal return they gain from sales is studied to see whether or not senior managers used private information to seize precise time to sell in order to gain the most abnormal return.By studying the reason for senior managers’ sales, it has been found that senior managers in GEM listed companies use private information about company’s future performance in their selling decision. Companies with worse prospect and higher ownership concentration are more likely to be sold more aggressively by senior managers.By analyzing senior managers’ abnormal return, it has been found that cumulative abnormal return (CAR) was 4.65% before sale and-0.32% after sale respectively. This reveals that executives time sales successfully and make profound abnormal profit. Besides, CAR on sales day is higher than any other days during the [-20.20] window. The result of this thesis does not support information anarchy hypothesis. That is, there is no obvious difference between senior managers’ rank and the amount of abnormal return they gain.The findings of this thesis would not only serve to improve our understanding in senior managers’ trading behavior, but also have important implicational value for investors and supervision department. The result may improve investor’s’ investment strategy. Clever investors can adjust their investment strategy based on observing senior managers’ move on the market.The result of this thesis also has enlightens on supervision department for it has proved that senior has gain profound abnormal return. This reveals that senior manager may use large amount or even illegally used private information in their sales thus making the market unfair. This means that the supervision department needs to enhance regulation force and reduce senior managers’ abnormal return by forcing companies to reveal information in time and punishing insider trading more severely.