Top Managerial Stock Ownership And Price Efficiency: Evidence From Growth Enterprise Market

With the development of market economy and the advancement of corporate system reform,how does the top managerial power influences the company becomes a more crucial question.In the meantime,the conflict of interests between top managers and shareholders becomes a problem.In order to solve the principal-agent problem and moral hazard,equity incentive has become a key internal governance mechanism of enterprises.In the high-risk environment such as Growth Enterprise Market(GEM),it is particularly important for Top managerial shareholding.This mechanism can alleviate the conflict of interests between executives and shareholders,effectively safeguard the rights and interests of shareholders,and promote the long-term development of enterprises.When top manager becomes a shareholder,they are not likely to publish information on time for their own interests.And this will further improve the performance of pricing efficiency in the stock market.On the other hand,when the largest shareholder holds more shares of the company,they could be a great restriction and a good supervisor.In the end this improve the corporate governance structure.This paper uses the panel data of GEM from 2010 to 2017.Three indicators are selected to measure the power of top managers: the proportion of top managerial ownership,CEO duality,and the controlling shareholder ownership.Price efficiency is used as an indicator to measure the performance characteristics of the stock market.There are six controlling indicators in terms of liquidity,institutional shareholding and company character.This paper establishes a fixed-effect model and empirically studies the impact of top managerial ownership on price efficiency.The result of this study shows that executive shareholding significantly improves the price efficiency of the company.And it further improves the ability of the stock market to respond to market information and corporate idiosyncratic information as well.Secondly,as the controlling shareholders hold more shares,the performance of price efficiency of the stock market becomes better.But CEO duality has no obvious influence on price efficiency since there are different identities they can choose.And for different industry,top managerial ownership doesn't have same influence.