The Motivation And Consequences Of "Risk-free" Stockholding Increasing

Affected by the international financial crisis,Stock index of 2015 hit a record low.The government has proposed a series of favorable policies to bloom the stock market.The “Risk-free” stockholding increasing appears in this case,a commitment published by company’s actual controller or chairman which encourages employees to buy stock shares of the company with extra promise and to compensate individually for corresponding lost.The company’s value may be underestimated or overestimated due to serious information asymmetry between the company’s actual controller and external investors.When the company’s value is underestimated,the actual controller can demonstrate their confidence in the company’s future development by providing a “Risk-free” stockholding commitment,thereby attracting external investors to buy stocks.This paper is based on efficient market theory,signal transmission theory,market timing theory and incentive compatibility theory.Firstly,24 companies were selected as research samples to analyze the features,motivations and effect of “Riskfree” stockholding increasing commitment.Furthermore,this paper selects a company named HUAWEI as a single case to conduct in-depth research,and explores the difference between the traditional “guaranteed-type” and the “incometype”,which aims to to promote the development of the capital market.On the basis of ensuring the availability of data,this paper selects 24 companies that carry out the “Risk-free” stockholding increasing in the lowest point of the 2017 stock market.The specific research conclusions are as follows:First,the motivation for implementing the “Risk-free holdings” is to expect to reduce the risk of equity pledge closing and transferring of control of the company.Secondly,in terms of implementation effect,as for employees,because there is no clear compensation mechanism,the rights and interests of employees are usually not guaranteed;in the aspect of creditors,the benefit of creditors will be affected by this commitment.It will be infringed;for the majority shareholders,it will be motivated to manipulate stock prices through earnings management and false information disclosure;for small and medium-sized shareholders,the benefit of small and medium shareholders will be harmed by stock reduction of majority shareholders.The contribution of this paper is mainly reflected in the following three aspects: First,the topic has certain novelty.This paper selects the hot topic of the current capital market,which aims to provide some academic references through the exploration of the full text.Second,a summary of the group case.This paper selects 24 companies that carry out the “Risk-free” stockholding increasing commitment as representative samples,and combines the case study of HUAWEI to analyze the motivation and effect of the “Risk-free” stockholding increasing commitment.Compared with the single case study method,the conclusions in this paper are more reliable.Third,the perspective of research is novel.This paper focus on four different perspectives of employees,majority shareholders,creditors and small and medium shareholders.The conclusions obtained are comprehensive.