Research On The Market Effect Of Pre-announcement Of Key Shareholders' Centralized Bidding Reduction On Listed Company Of China

As Chinese financial market becomes more and more concerned and reform policies in every field are being further implemented,the deficiency of financial market system in our country attracts more and more attention,in consequence,one of vital threats that jeopardize the stability of capital market—key shareholders' reduction—becomes the first to be resolved.With the implementation of non–tradable shares reform,many key shareholders like majority shareholders,executives and big shareholders reduce their shares in listed companies,which causes inequality in mastering information between those key shareholders and others small and medium investors,so that key shareholders can use information predominance and power of stock price control to increase the stock price artificially and to make fortune by selling their shares,with intention to maximize their profits,but in the other side,the “tricks” of these shareholders would destroy rights and interests of small and medium investors,jeopardize their profit and even provoke abnormal fluctuation in stock market.Because of the problem,not only specialists but also market participants focus on studying market effect of reduction in listed company.With literature,it's found that in this area,majority of specialists' studies merely concentrate on market effect of real announcement of reduction and real effect by reduction,but rarely talk about effect under the pre-announcement system of reduction in new reduction rules.Therefore,the thesis studies and analyzes the pre-announcement of key shareholders' centralized bidding reduction published in period from June of 2016 to December of 2017 with sample of 205 companies.Utilizing event study methodology,studies the market effect of pre-announcement of key shareholders' centralized bidding reduction,and through multiple linear regression,analyzes factors to influence market effect of pre-announcement of key shareholders' centralized bidding reduction.From results of the sample analyzed,the thesis comes to the conclusion that the market effect on the day when key shareholders in listed companies announce in advance that they would sell their stock through centralized bidding transaction is negative,and this negative effect is persistent.There is a negative correlation between this negative effect and the rate of expected reduction,and the effect has positive correlation with valuation levels of stock,company's growth and price level.Finally,according to relevant theories analyses and the empirical results of studies,the thesis provides suggestions for reference,with which the government could make policies and effectuate supervision for response to the reduction,investors make decisions and companies in intention to sell stock manage well the market capitalization,also offer significant inspiration for future studies in terms of pre-announcement system of reduction.