Research On The Motivations And Influences Of Executives' Ownership Change In The GEM

The Growth Enterprise Market(GEM) has been suffering massive selling with executives' up-locked shares gradually expired, which is becoming a focus of the industry. Stock trading behaviors of insiders such as company executives and major shareholders will certainly have an impact on the market. In order to effectively stabilize the market and avoid abnormal fluctuation, this paper pays attention to the research for motivation and influence of executives when they change their ownership.The paper studies the motivation and influence of executives' trading in the GEM under efficient market theory and asymmetric information theory, and further researches on the excess return of executive relatives, and then gives some policy suggestions on insider trading.This paper is structured as follows. Firstly, the paper describes the status of the efficient market theory and asymmetric information theory, and tests the effectiveness of GEM; secondly, this paper uses statistical and regression methods to analyze the motivation of executives' trading, proves that the proportion of reduction increases with the increasing of overvalued extent, shareholding proportion, and decreases with the increasing of the development level and profit situation. Thirdly, the paper analyzes the information content of insider trading by different executives based on the information hierarchy theory. Finally, it uses the event study method to observe changes in market before and after executives stock trading, analyzes the impact on the market and executives themselves, and further researches on the excess return of executive relatives by insider trading.The innovations of this paper are as follows. This paper studies the executives' trading behavior under the background of the expiration of up-locked shares in GEM, and researches on the motivation of their trading, compared internal information included in insider trading among different executives. Furthermore, this paper analyzes the impact on market, and explores the excess return of executive relatives, then gives some policy recommendations.