Analysis Of The Influence Of Reduction Of Major Shareholders On Corporate Value

With the development of economy,there has been been profound achievements obtained in China's capital market.However,many problems have emerged correspondingly.That the major shareholders reduced their holdings is one of the key issues which need to be focused on.According to reading and analyzing the related reports,it can be learned that there are many reasons for the major shareholders' reduction in their holdings,including optimizing the company's ownership structure without paying attention to company's development prospects,cashing for profits and so on.Now major shareholders' reduction in holdings is more and more universal.And it often passes negative information to the market,which can destabilize investors' confidence.At the same time,it often happens with the tunneling of listed firms and loss of minority shareholders' interests.Therefore,the reduction in holdings of major shareholders seriously affects the development of China's stock market.Therefore,it is necessary to make it normal.In order to know the reasons and ways of the reduction in holdings of major shareholders as well its effects on small and medium shareholders and enterprise value.This paper analyzes the reduction in holding of major shareholders according to A company by normative analysis and qualitative analysis with case study.On the hand of normative analysis,the paper reviews and concludes some domestic and foreign research,and it also explains some relative theoretical basis.In the part of the case,it analyzes the reasons of the reduction in holdings of the majority shareholders of Company A and calculates the enterprise value before and after the reduction.The research found that the motivation of major shareholder's reducing their holdings was mainly due to the poor performance of the company and the cash withdrawal of major shareholders,while the major shareholders would use the information disclosure strategy to lift the share's price before the reduction of shareholdings and then gain more after the reduction.The most direct impact of the major shareholders' reduction in holdings is that the share price,which is directly related to the interests of small and medium shareholders,has dropped sharply.And it also leads to impairment for the interests of minority shareholders.On the hand of enterprise value,the ownership structure of Company A has been improved with the reduction in holdings of major shareholders,including the changes of equity concentration and equity and equity balance.Before the reduction,small and medium-sized shareholders hold fewer shares,so they can not play a practical role in making decisions for the company.And their enthusiasm for corporate governance is less.Therefore,many of them mainly do the short-term speculation.However,it changed after the major shareholders reducing their holdings.Because of the change of ownership structure,the increasing number of small and medium-sized shareholders and the supervision to major shareholders from other shareholders,the small and medium shareholders' responsibility and enthusiasm have all been raised and then the increase of enterprise value.Finally,this paper gives some advice according to the regulation of the major shareholders' reduction in holdings and the improvement of ownership structure.For the internal governance,we need a sound and effective restriction and balance mechanism of major shareholders and an incentive mechanism for shareholders in order to ensure that enterprise value can continue to be improved.For the external supervision,the laws and regulations related to the behavior of major shareholders should be further perfected.At the same time,the legal environment should be improved and the supervision should be strengthened so that the interests of minority shareholders can be protected by law in all aspects and the shareholders' enthusiasm for governance can be improved.It also can help to enhance enterprise value.