Study Of The Holding's Reduction Of YD Group Major Shareholders

After the tradable share reform in 2005,China's stock market gradually entered the era of full circulation.However,with the gradual listing of banned stocks,the reduction of major shareholders have frequently occurred.It is legitimate for major shareholders to appropriately reduce their own shares in accordance with laws and regulations,and it is also beneficial to improve the company's shareholding structure.However,from the perspective of market deductions,there are more and more reductions of major shareholders,and some irregular and illegal reductions have begun to appear.Among them,there are no shortages of illegal operations,which have benefited major shareholders tremendously,or large number of reductions,they has brought great impact to the market and even damaged the stable and healthy development of the entire capital market.What are the motives of major shareholders to reduce their shares in listed companies? Is there a timing choice? What kind of effect will the reduction of controlling shareholders have? What are the risks to major shareholders and listed companies,especially to minority investors? How to prevent these risks? This series of issues is not only the core issue of the allocation of ownership structure and control rights of listed companies,but also the signal transmission problem of the capital market.It is of great significance to the corporate governance structure,capital market supervision and investor protection,so it is worthy of study.Based on principal-agent theory,signal transmission theory,support effect theory and other basic theory of major shareholders reduction,this thesis takes such a case as the research object—From April 4,2015 to December 21,2015,YD Group's controlling shareholder,LYX,and its concerted parties earned a cash out case of RMB 6.7 billion from transferring through block transactions and agreements,with cooperation with the “high transfer” announcement to reduce 60% of the shares within one year.With a combination of qualitative and quantitative analysis methods,the modified Jones model was used to analyze the earnings management behaviors of major shareholders prior to their reduction and to calculate the ability to transfer shares and to study the implementation path and timing of major shareholder reductions,verify whether it leverages its influence on listed companies,and issue favorable news to cater for their reductions.Afterwards,the thesis analyzes the real motives for the reduction of major shareholders from the macro stock market environment,business performance,market performance,stock valuation,etc.The results show that cash out and gaining interest is the main reason for the reduction of major shareholders.Then the thesis studies the influence of major shareholder reductions,the study finds that major shareholder reduction will cause negative market reaction,and will also affect the company's operating conditions,resulting the performance decline.At the same time,this study also studied other influences of major shareholder reduction on the equity of small and medium shareholders.The study found that with the occurrence of major shareholder reductions,the company's share price dropped sharply,triggering instability in the capital market,and its losses can only be borne by minority shareholders themselves.On the other hand,shareholder reductions inject new vitality into the company's development,introduce new shareholders and management,and implement a strategic transformation,but its long-term results still need to be observed.Finally,this article proposes reference suggestions from the supervisor authorities,the listed companies themselves,and the minority shareholders in order to better standardize the behaviors of major shareholder reductions and protect the rights of minority shareholders.The supervisor department must refine the relevant laws and regulations to improve its operability in practice,and at the same time strengthen the information disclosure requirements for the reduction of major shareholders,and also increase the punishment of companies which violate the law and regulations to show their vigilance.Listed companies should perfect the corporate governance structure and balances of equity,avoid dominance,and at the same time the board of directors should play an active role.Minority investors should improve their professional knowledge,and establish a correct investment concept to avoid blindly following the trend,and rationally determine to protect their rights and interests.