A Study On Executive Shareholding Reduction And Financial Behaviour Of Listed Companies

Since 2006,the company law stipulates that the shares transferred by the company’s senior managers,supervisors and directors during their term of office are not allowed to exceed 25%of the total shares of the company,which has opened the prelude to insider trading.At the same time,the rapid development of Chinese economy leads to fierce competition among enterprises.In such a complex and changeable economic environment,the executives and major shareholders of many listed companies are unwilling to bear all kinds of risks of the company.In this case,the executives and major shareholders will choose to reduce their holdings at the high point of the company’s share price and then leave.Subsequently,the phenomenon of senior management reduction of listed companies occurred frequently,even clearance reduction,which attracted the great attention of investors and stakeholders.Although the capital market strictly regulates the reduction of holdings,the executives of listed companies can still obtain excess returns through internal advantages and capital operation.Based on the systematic combing of the reduction of holdings at home and abroad,this paper comprehensively uses the methods of case study and event study,and takes the signal transmission theory,market timing theory and opportunism theory as the theoretical basis to study the reduction of holdings of Wuxi apptec company.First,this paper combs the specific events of the company’s shareholding reduction in 2019-2020;Second,it analyzes the motivation of Wuxi apptec’s executive reduction,its impact on financial behavior and the impact of executive reduction on enterprises and the market,and draws relevant conclusions;Finally,this paper puts forward practical enlightenment to the reduction behavior of executives of listed companies from the three dimensions of companies,investors and regulators.