Institutional Investor Site-visit,Market Environment And Executive Stock Reduction

Since the launch of the GEM,along with the characteristics of high P/E ratio,high issue price,and high fundraising,it has become a common phenomenon that listed company executives sell their shares through the secondary market in order to exchange more cash in hand.The scale of executive stock reduction make significant negative influence to the development of the capital market.In order to control the chasing of executives,the CSRC has continued to introduce regulations on reductions.The strict supervision system has played a positive role in governance.However,the reduction of executives still jeopardizes the interests of small and medium investors.It has aroused close attention from all aspects of the society.The paper mainly discusses the impact and path of action of institutional investors'site visit and market environment on executives' reduction,from the external perspective.At the same time,the heterogeneity of institutional investors is included in the discussion.What role does heterogeneity play in institutional investors'site visit on the impact of executive reduction?Secondly,what is the difference between the site visit behavior and the impact of executive reduction under different market environments?Furthrtmore,what role does institutional investor holding play in the relationship between site visit and executive reduction?In response to these questions,this article will spread out full research respectivelly.This paper takes the GEM listed companies with executive reductions from 2013 to 2017 as samples,and uses empirical analysis methods to draw conclusions.Firstly,institutional investors' site-visit has played a role in governance in executives'reductions.The better the regional legal environment and financial market development,the more it can inhibit the reduction of executives.In areas where the marketization process is low,the financial industry is not well developed,and the legal system is not sound enough,the behavior of institutional investors' site visit has influenced on executives'reduction more sigificantly.What's more,for the heterogeneity of institutional investors,independent institutional investors are more influential than non-independent institutional investors in the governance of executives'reduction.Additionally,institutional investors'shareholdings have played a role of internal supervision in suppressing the reduction of executives' holdings.When institutional investors hold low levels of equity,site visit has a more pronounced inhibitory effect on executives'reductions.Ultimately,on-the-spot investigation by institutional investors has further curbed the behavior of executives' reduction by improving the quality of information disclosure,and the quality of information disclosure has played a mediating role in the relationship between the two.This paper has the following research value and practical significance.On one hand,it enriches the discussion on the reduction of executives and the site visit of institutional investors,providing direct empirical data for improving the market environment and introducing institutional investors to conduct site visit and suppress the effect of executive reduction.On the other hand,the paper explains the role of institutional investors in site visit on the reduction of executives.Combined with the research conclusions,it provides a way for the majority of investors to use the governance role of institutional investors to conduct on-the-spot investigations,and to provide ideas for how to regulate the behavior of executives to reduce their holdings and improve the quality of information disclosure.