Managers' Stock Holdings Under Policy Pressure:an Empirical Study Of Market Response And Motivation

There has been an unusual decline in China's stock market since the middle of July 2015,then the regulators issued a series of policies to encourage insiders of listed companies to increase their stock holdings to maintain the stability of the stock market.In this context,insiders especially managers set off a surge of stock holdings.Although the behavior of insider stock trading has always been a research hotspot theoretically,the mainstream literature focuses more on large shareholder groups.However,managers,as direct business operator of enterprises,have more information advantages than the internal and external person of companies.This paper intends to study the market effects of managers' stock holdings and explore differences in motivation behind different managers' holdings feature,based on the background of the holdings pressure imposed by regulators under this stock market crash.This paper takes a data sample from 2015.07.08-2016.12.31,and adopts a method of event study,logistic and multiple regression analysis.The study found:(1)Under the background of falling stock prices and policy pressures,the overall increase in stock holdings of managers caused a strong market reaction,which eased the situation in which the stock market continued to fall.In addition,a positive accumulated abnormal return(CAR)can be obtained by buying stocks after the stock holdings;(2)The cost of managers' increase stock holdings will significantly affect the direction of CAR.The higher the price paid by managers for holdings of stocks,the better the market reaction,that is,the more likely they are to obtain a positive CAR,and this effect is more significant in non-state-owned companies;(3)The main influencing factors behind the huge difference in managers' cost of holdings are based on the evaluation of the company.When the company's past performance is better,the managers are more willing to increase stocks at a high price with significant financial motive,on the contrary,the managers who are unwilling to pay high prices for increased holdings have no significant relationship with the company's performance,and only be a symbolic increase in holdings under the pressure of the policy.