Stock-selling Of The Big Shareholders,Information Manipulation And Minority Investor Protection

In China,tunneling behaviors by big shareholders are pervasive in listed firms.With the beginning of non-tradable share reform since April,2005,big shareholders get transferring rights of their stocks by selling some stocks at high price.In order to achieve this goal,big shareholders tend to release good news before the trade,while delaying the release of bad news.High stock dividends or high transfer of reserve to common share,mergers and acquisitions and earning forecasts are important business decisions of listed companies.The information which can influence investors' decisions is often manipulated by big shareholders.Big shareholders,in collusion with private equity funds release information of listed companies.The private equity funds then pull up the stock price by buying the stocks.When minority investors race to buy the stocks,they sell the stocks at expected price.The big shareholders make a killing in the stock market using improper means,while the benefits of minority shareholders are badly damaged.With the increase in the number of listed companies,the number of stocks sold by big shareholders also increases.We need to restrict the self-interest behavior of big shareholders to protect the interests of minority investors and construct a fair and impartial capital market.In this dissertation,I first review the literature on stock-selling of big shareholders and do analysis of the legal provisions in China.Then I select and discuss four types of information manipulation behaviors by big shareholders.I also explore the motivation of big shareholders from three aspects which are the current laws and regulations,loophole for blocking trades and low violations cost.Finally,I give some suggestions for regulatory institutions.There are two contributions in this dissertation.First,the research is new in this dissertation.Different from most of previous studies in China,this research focuses on information manipulation.By case studies,this paper finds four types of information manipulation behaviors by big shareholders.Secondly,the paper combines some of the latest hot issues in capital market,such as private equity funds manipulation,selling stocks through block trades,etc.The limitation in this dissertation is that I don't obtain the data of proportion of four types of information manipulation behaviors in capital market as information manipulation is conducted secretly to support the issue that information manipulation is pervasive in stock-selling of big stockholders.