The Case Study Of The Major Shareholders' Illeagal Stock Reduction-Shandong Molong Petroleum Machinery Co.,Ltd

Since the implementation of the split share structure reform in China,the capital market has developed rapidly.As of the end of 2019,the A-share market has more than 3,700 listed companies.While raising funds through the capital market,many major shareholders of listed companies have madly reduced their holdings after the price of shares was lifted.According to Wind statistics,in 2016,a total of 1,097 listed companies issued announcements of reductions,with a total reduction of approximately 279 billion in market value.Affected by unprecedentedly severe new regulations on share holdings,the number of listed companies with net holdings decreased to 947 in 2017,but the amount was still as high as 159.982 billion yuan.Although the stock reduction by major shareholders is a right conferred on them by law,as the stock market of China is still in the development stage and the laws and regulations related to the reduction of holdings by major shareholders are incomplete,major shareholders tend to take advantage of the information and take measures to raise the stock price,and then obtain private gains by reducing holdings in the secondary market.In recent years,the phenomenon of illegal stock reduction by major shareholders of listed companies has continued to emerge in the stock market,which not only has a negative impact on the development of the company itself or has a huge negative impact on the market,but also has violated the rights and interests of small and medium shareholders.Therefore,how to prevent major shareholders from illegally reducing their holdings and protecting the interests of minority shareholders has become a very important issue.At present,domestic scholars' discussions on the issue of major shareholders' holdings mainly focus on empirical analysis and theoretical research,and they are rarely presented in the form of case analysis.This article selects the listed company named Shandong Molong Petroleum Machinery Co.,Ltd.as a case company for research.The major shareholders of the case company have a variety of measures to reduce their holdings and the amount is huge,which is a typical example of major shareholders in the capital market.This article studies the reasons,methods and consequences of the shareholders' illegal stock reduction in the company,and puts forward suggestions to prevent the shareholders' illegal reduction of shares.This paper is mainly divided into the following four parts:The first part includes introduction and theoretical overview.Firstly,the background and significance of this paper are introduced.And based on its content,the existing researches of domestic and foreign experts and scholars are briefly summarized and reviewed.Meanwhile,it presents ideas and methods to construct the basic framework;Secondly,the article defines the relevant concepts of major shareholders' violations and reductions,and classifies its types;the motivation,consequences,and relevant policies and regulations of common major shareholders' reduction in shares are summarized.The second part is case introduction,including the company's shareholding structure,shareholders' situation,and background of the reduction that prior to the illegal reduction of shares,and a review of the process of major shareholders' implementation of illegal reductions.The third part analyzes the case of Shandong Molong's major shareholders reducing their holdings in violation of regulations.First of all,based on the internal and external environment,it analyses the reasons of reducing their holdings,including the poor performance of the company,the imperfect corporate governance mechanism,obtaining excessive returns and defective external regulatory system;Next,information analysis,earnings management and other means are used for stock reduction process;then comes to the consequences of violations and reductions of holdings by major shareholders,as for the company's own follow-up development,possible impact on minority investors and the capital market,and it is found that the company's operating conditions are not optimistic after illegally reducing the company's shares.The sharp decline in stock prices has caused large investment losses for minority shareholders,which has a negative impact on the market and is not conducive to the fair and stable development of the securities market.Finally,through the analysis of the case of Shandong Molong's major shareholders' illegal reduction of holdings,it is concluded that the imbalance of the equity structure has created conditions for the major shareholders' illegal reduction of holdings;manipulation of information disclosure is a common method for the major shareholders' illegal reduction of their holdings;Holding has a negative impact on the market and small and medium investors.At the same time,it puts forward policy recommendations to prevent the major shareholders of listed companies from violating regulations and reducing their holdings: perfecting the equity check and balance mechanism of listed companies;strengthening the relevant systems of major shareholders' information on reducing their holdings;refining laws and regulations on reducing major shareholders' holdings;reducing punishment;improving the interest protection system for minority shareholders.