Research On The Effect Of "Risk-Free" Shareholding Increasing Of Listed Companies

In 2015,the stock market of China experienced a good trend of rising all the way,and then experienced a sharp decline due to a series of reasons.Since 2015,Risk-free Sharehold Increase appeared in July 2015,January 2016,February 2018 and February 2020 respectively,which is often used as a kind of announcement that can convey positive signals when the stock market is not good and the price of stock falls seriously.In the face of the Risk-free Sharehold Increase often used in enterprises in recent several years,enterprises also have a series of problems in the process of its implementation.Second,after the announcement of the implementation of the Riskfree Sharehold Increase,the market reaction of the company is different in different periods,and in the long run,the market performance of some listed companies is not satisfactory,the reasons behind which are worth studying.Third,the initial purpose of the implementation of the bottom increase is to stabilize the falling stock price,and to convey to market investors the confidence in the company’s future development and the affirmation of the company’s value.However,the situation of most enterprises before the implementation of the Risk-free Sharehold Increase is not consistent with the development stated in the announcement.Third,as a new mode of ESOP,Risk-free Sharehold Increase lacks due supervision and is abused by the management of enterprises to some extent because it can increase the stock price in a short period of time.Therefore,there is still a lack of relevant regulations on the supervision and policy aspects of Risk-free Sharehold Increase,such as implementation conditions,fulfilling commitments to loss-making employees and risk prevention and control.This paper selects two listed companies in the same industry that issued the announcement of Risk-free Sharehold Increase in the same period of 2017 as the objects of research for case comparison,to compare the differences in market effects after Riskfree Sharehold Increase and analyze the reasons behind the differences from both financial and non-financial aspects.This paper first expounds the relevant theoretical basis,discusses the implementation path and defines the relevant concepts.Then,the related Risk-free Sharehold Increase in the development of our country are introduced,and the selection of double cases explain the reasons,case introduction.Then,based on the event study method,this paper analyzes the difference of the market effect of the Risk-free Sharehold Increase.Then,on the basis of analyzing the differences,the reasons for the long-term differences in market effects are explored from the financial perspective and non-financial perspective such as major event business,and the fundamentals of the two listed companies are studied,whether they are developing well as stated in their announcements,whether they have a good development trend and whether they have investment value in the future.Finally,it is found that from the financial perspective or non-financial perspective,the fundamental situation of Xinghui Stock,namely,its profitability,operating ability,development ability and solvency,is better than that of Funeng Oriental.Therefore,the conclusion of this paper is that the short-term market reaction effect of the Risk-free Sharehold Increase behavior is positive,but in the long run,it depends more on the actual development and operating conditions of the company.Based on the above literature and the comparative analysis of the double cases in this paper,the final conclusions are as follows:(1)It is difficult for the management to actually carry out the Risk-free Sharehold Increase.(2)In the short term,the implementation of this behavior can increase the stock price,and the market effect is positive.(3)In the long run,the degree of its positive effect on stock price decreases with time.(4)What really affects the long-term effect of Risk-free Sharehold Increase depends more on the actual development of the company and the actual investment value.(5)There may be traps as mentioned in the announcement.Regulatory authorities should strengthen supervision and investors should treat them rationally.