Research On The Motivation And Effect Of Listed Company's "Bottom Guaranteed" Holding Increase

In 2015,China's A-share market experienced a rapid rise in the early period and the collapse of the stock disaster in the later period.The Shanghai Stock Exchange Index fell more than 45%in just two months.In order to resist systemic risks,the state has launched a series of stability maintenance measures and supported listed companies to increase their holdings.Among them,a " bottom guaranteed holding increase" came into being.The so-called "bottom guaranteed holding increase "can be understood as an additional employee shareholding plan with a major shareholder's pocket commitment.In popular terms,it is the largest shareholder or actual controller of a listed company calling on its employees to actively purchase the company's shares.If it is profitable,the income will be owned by the employee holding the share,and if there is a loss,the promiser will fully compensate it.In 2015,a total of 13 companies issued "bottom guaranteed holding increase" announcement,and since then "bottom guaranteed holding increase" announcement,have often been used as a tool to raise stock prices during periods of falling share prices,which has sparked heated market debate.By sorting out relevant literature,this paper finds that "bottom guaranteed holding increase" announcements are usually interpreted as a signal that management has confidence in the company's development or that the stock price has been undervalued,and the market usually gives a positive response.But what are the motivations behind these major shareholders' "bottom guaranteed holding increase" commitments?Can the "bottom guaranteed holding increase" promise really play a role in boosting stock prices and company performance?And as secondary market investors,how should they properly treat such"bottom pocket" announcements?Based on relevant theories such as the efficient market hypothesis,this article reviews the occurrence and development of the "bottom guaranteed holding increase" and summarizes their characteristics and motivations,and then uses a case study method to specifically analyze the two "bottom guaranteed holding increase" of the Yan Tai Shuang Ta Food Co.,Ltd in 2016 and 2017.Based on the related events before and after the time point of the announcement,we analyze the motivations of the two "bottom guaranteed holding increase";and then based on the stock price change during the " bottom guaranteed holding increase" window period,the excess return rate is used to evaluate its short-term impact on the company's stock price;at last combined with the long-term trend of the stock price and related financial analysis indicators,it is evaluated whether the "bottom guaranteed holding increase" has a long-term positive effect on the company's stock price.This article finds that the purpose of the Yan Tai Shuang Ta Food Co.,Ltd's "bottom guaranteed holding increase" announcement is mainly to encourage employees and send positive signals to the market in order to boost the stock price and reduce the risk of closing equity pledges.In the short term,there are indeed effects.However,in the long term,such announcements have not brought about a substantial improvement in the company's performance,and the stock price will soon fall after the rise.Therefore,at the end of this article,it is suggested that the supervisory department should introduce a supervision policy for " bottom guaranteed holding increase" and strengthen information disclosure.Enterprises should also pay attention to corporate performance.and investors should take a reasonable look at "bottom guaranteed holding increase" announcements and be careful not to follow suit.