Research On Motivations And Effects Of Shareholding Increasing With Lowest Price Allowance By Major Shareholder Of Listed Company

Since 2018,China's stock market had been falling steadily for a long time,with sharp decreases of Shanghai Composite Index,Shenzhen Component Index and Growth Enterprise Market Index.Among them,the Shanghai Composite Index closed at 2493.90 points,tumbled by 24.59%,bearing the second largest slump since 2008.In October 2018,hundreds of shares fell again.Thus,large shareholders,controlling shareholders,chairmen,etc.listed shareholding increasing with lowest price allowance notices to employees,intending to enhance investors' confidence,to prevent continual slumps on stock price,and to maintain market stability.From October 16 to the morning of October 18,a total of 9 listed companies issued notices advocating employee ownership increase,and 80% of the companies experienced rises on share price.Major shareholders,chairmen or managers are common issuers of shareholding increasing with lowest price allowance plan,and will compensate employees for the loss caused by shares bought when meeting certain conditions,intending to encourage employees to increase their share ownership.This new way was born in July 2015.In less than four years,however,they appeared six times,and the number of listed companies participating increased significantly.It is being more and more favored by listed company shareholders,and is attracting more and more attention from investors.Researches on this are particularly valuable.Using case study method,based on Shenzhen Clou Electronics Co.,Ltd.,this paper analyses two actions happened in 2017.Firstly,this paper finds the motivations behind are:raising company's share price,preventing stock pledge explosion and expecting investment value to be discovered.Secondly,the short-term and long-term implementation effect is studied also.Thirdly,based on the above analysis,incentive strength problem,compensation qualification problem,reliability problem and extension problem that may affect the implementation effects of this action are found.Finally,three suggestions are put forward:setting reasonable incentive strength,establishing management team and improving market supervision.Hoping them could be useful to improve the implementation effects of shareholding increasing with lowest price allowance of Shenzhen Clou Electronics,and could also provide references for other listed companies.