Research On Market Effect And Company Performance Impact Of The Major Shareholders Holdings Of A-Share Listed Company In China

In our country before the implementation of the reform of equity division, the listed Corporation’s stock is divided into two parts, the tradable shares and non-tradable shares. Because of poor liquidity, the transfer price is generally lower than the current share price, resulting in a serious phenomenon of the same shares with different price,leading to large shareholders do not care about the price of company’s stock, that is not conductive to safeguard the interests of small investors. After the completion of the reform, the non-tradable shares held by major shareholders can freely circulate in the stock market, the company’s stock price and the interests of the major shareholders are tied together, and the interests conflict of major shareholders and small investors are relieved. In this context, The major shareholder holdings boom appeared in China, the major shareholders holdings as the company’s important insider trading behavior is increasingly concerned by the theoretical circle.Major shareholders holdings is major shareholders’ behavior of purchasing the company’s stock in security market. As internal members of the listed company, major shareholders master more information than the external investors, thus they can estimate the company’s performance and the value of the stock more precisely, their behaviors of trading stock provide important value for external investors, especially small investors.In general, the announcement of major shareholders holdings shows the confidence of the company’s performance in future. In this paper, the author analyzes the reaction of the stock price and the change of the company’s performance by the announcement of major shareholders holdings.The author chose 200 listed companies’ announcement of major shareholders holdings in Shanghai Security Exchange and Shenzhen Security Exchange from January2012 to May 2015, used event study method to analyze the reaction of the stock price by the announcement of major shareholders holdings, used Factor Analysis and Paired-Samples T Test to analyze the change of the company’s performance by the announcement of major shareholders holdings.Above all, the author introduced some foreign and domestic research to enrich my relevant knowledge and made some summaries theoretically. Then the author made some demonstrations to explain the behavior of major shareholders holdings. The authorfirstly used event study method to analyze the reaction of the stock price by the announcement of major shareholders holdings. The author divided all the samples into two groups by different market conditions and different company’s characters, tried to analyze the effect of these two factors, and then used cumulative abnormal return from the trading day before the announcement to the sixth trading day after the announcement, added five other factors as explanatory variables to estimate the influence of 7 explanatory variables, which were company’s character, market condition,holding proportion, stock’s trend before holding, ROE, cash flow of per share and Tobin’s Q. Secondly the author used profitability, solvency, development ability and operational ability to calculate the company’s performance by Factor Analysis, then observed the change of the company’s performance by Paired-Samples T Test.After the theoretical and empirical analysis, the author attributed that there was a significant positive reaction of the stock price by the announcement of major shareholders holdings. The regression result shows: cash flow of per share, ROE,holding proportion and stock’s trend before holding had a positive correlation with the dependent variable, while Tobin’s Q had a negative correlation with the dependent variable. Non-state-owned enterprises responded more positive effect than state-owned enterprises, the samples in bear market performed more positively than those in bull market. Through the result of the change of the company’s performance, the author considered that holding couldn’t improve the company’s performance. What’s more, the more proportion major shareholders holding, the worse performance the company showed. At last, according to the previous discussions and demonstrations, the author gave some relevant suggestions to the policy maker, major shareholder and external investors.