Ownership Concentration And The Crash Of Stock Price

Investors usually care about the possibility of crash of stock prices because it relates to investors' assets.Ownership concentration is an important conception in corporate governance.It reflects the ownership structure of a firm.According to the Principal-agency Theory,with the increase of the proportion of shareholding of the large shareholders,large shareholders will be more active to supervise the managers' behaviors.On the contrary,it is more likely for them to infringe the interests of the minor shareholders.With both of the effects,we are very interested in whether the increase of the proportion of shareholding of the large shareholders will affect the firm's stock price.In this thesis,we have taken as specimen China's A-share listed companies in the Small and Medium Enterprise Board between 2007 and 2016 to investigate the effect of the ownership concentration on the crash of the stock price.In our study,we have discovered that,with the increase of the proportion of shareholding of the large shareholders,the risk of the future crash of the stock price will obviously decrease.After the analysis of the crash of the stock price,we found that this phenomenon happens because of the following reasons: Firstly,the increase of the proportion of shareholding of the large shareholders will increase the return on assets in future financial reports.Secondly,it will also increase the earning management level and strengthen the information asymmetry between the firm and the investors,thus increase ROA in the future.These two reasons make the possibility of stock price crash decrease.In this thesis,firstly we introduce the background and the goal of this topic,and we will summarize the related theory and literature to establish a complete theoretical framework of this topic.Then we use methods of panel data regression to perform regression analysis.We find that with the increase of the proportion of share holding of the large shareholders,the risk of the future crash of the stock price will obviously decrease.According to our theoretical framework,we also try to find the reasons behind this phenomenon.Finally,we summarize our results and point out possible directions for future study.In this thesis,we have not only deepened the study on the influencing factors of the risks of the crash of the stock price,but also provided empirical evidence helpfulto our completely recognize the role of the large shareholders in the management of the company.This thesis has important significance for how to deeply understand the effect of the large shareholders on the capital market,and how to guard against the crash of the stock price,and for promoting the healthy and well organized development of the capital market.