The Market Reaction Research On Share Selling Of The Major Shareholders

In recent years,big shareholders frequently reduce holdings of shares,thus causing abnormal fluctuations in stock prices.Part of the big shareholders and senior executives has been questioned in the important announcement to trade during the sensitive period,in addition,insiders' accuracy of timing choice also suffered doubts from market,insiders seems always sale stocks at high price,buy stocks at a low price,and profited.The trading behavior of big shareholders as an indicator of investment decision,many investors are extremely sensitive to announcement information.Therefore,this article research is helpful to regulate the behavior of major shareholders holdings,strengthen the supervision of the government,improve the quality of the holdings of information disclosure and guide the investment decision of outside investors.As China's stock market is unique,based on empirical research of China's A-share listed companies,through the method of event study,we calculate the excess returns before major shareholders release announcement of reducing stock shares and research the market reaction after major shareholders release announcement of reducing stock shares.Again,the article introduce control variables of enterprise nature,asset-liability ratio,earnings per share,build the empirical regression model to research the market reaction.Study found that before and after the underweight announcements,the cumulative excess return present inverted V,in the process of underweight,the major shareholders performance surplus market timing ability,and investors read the major shareholders holdings events for the bad news,passed on valuation positions on the high side or business prospects of poor signal.In most cases,the more shares major shareholders selling,the more negative the market reaction be.But further study found that the market reaction on share selling of the major shareholders holdings is not always bad,the behavior of private purposes such as arbitrage and reduce the risk can cause abnormal fluctuations in stock prices,and the behavior of optimizing equity structure purpose will not have significant negative impact on share prices.In addition,the growth of the enterprise,individual factors such as scale,nature will also have impact on market reaction on major shareholders' share selling According to the paper's conclusions,the article puts forward some suggestions: first,the major shareholders should regulate their behavior through the process of share selling;Second,countries need to establish the related system;Once again,the listed companies should improve the quality of the holdings of information disclosure;Finally,the investors should analysis major shareholders' holdings behavior rationally and avoid unnecessary loss.The paper may have following innovation points: first,this article is based on the empirical data of A-share listed companies in China,the market reaction problem inthe major shareholders holdings,underweight announcement information considered simultaneously in the research process,the influence of multiple factors such as the company fundamentals;Second,the influence of its announcement,including not only reduce the content of the announcement,also the point announcement(timeliness)problems,has certain innovations;Third,the paper study on Chinese stock market phenomenon,the key research of the motivations behind the recent major shareholders holdings,excess return,market reaction and its influencing factors,has a certain particularity and the practical significance,and combined with the special system background to explain and policy recommendations.