Study On Merger & Acquisition And Divestment Arbitrage Behavior

Since my country’s share-trading reform,many major shareholders have reduced their holdings at a high level,which not only harms the interests of small and medium investors,but also disrupts the rule of the capital market.The China Securities Regulatory Commission has issued relevant regulations twice to regulate the reduction of major shareholders’ holdings,althought it has worked,but the behavior of reduction always happened.At the same time,the M&A activities are also increasing,and some studies have shown that there is a significant positive correlation between the reduction of holdings and the M&A activities.This paper attempts to sort out the relationship between the major shareholder’s reduction and M&A behavior and the transmission path of its influence.Through analysis,this paper draws the following conclusions: First,M&A activities will produce alienation effects,induce major shareholders to reduce their holdings,and then manipulate M&A activities to make listed companies become M&A tool;second,major shareholders use M&A arbitrage to reduce stocks is tunneing,other insiders do not want to improve the business situation,but reduce their holdings;third,the large shareholder’s reduction arbitrage will cause the stock price to fall or even collapse in the short term.In the long run,the tunneing behavior has laid hidden danger on business operations,resulting in sluggish performance growth and low investor sentiment,which in turn manifests as a sluggish growth in market value.Based on this,this paper puts forward three suggestions: One is the independent directors system,avoid the selection of personnel with close relationship with major shareholders as independent directors,small and medium investors can select personnel.Then create evaluation index for performance of independent directors.Two is the external supervision,special attention should be paid to abnormal suspension of trading to avoid listed companies damage external;the reduction of holdings by means of agreement transfer also should make pre-disclosure;With reference to the pre-disclosure requirements for reducing holdings,set up the range of other information disclosure of listed companies to prevent listed companies from hoarding information and artificially creating opportunities for reducing holdings.investors’ right to know.The supervision of the company’s information disclosure,with reference to the pre-disclosure requirements for shareholding reduction,set a range for other information disclosure to prevent listed companies from hoarding information and artificially creating opportunities for shareholding reduction.Third in the protection of small and medium investors,the knowledge of investors’ s protection should be strength,including the approaches to safeguard,platform,ect,and make investor service centers play its role,help and encourage the investors whose rights were damaged to protect their rights;Finally small and medium investors should learn a lesson from this case,treat M&A behavior rationally,and beware of being confused by the exaggerated tone of management of listed companies.