Research On The Behavior Of Major Shareholders’ Reduction In Listed Companies

With the completion of the share-trading reform in China,the restricted shares began to be lifted gradually,and the frequency of shareholders’ reduction increased.Although the law sets many restrictions on the behavior of major shareholders to reduce their holdings,it is still common for major shareholders to reduce their holdings.Reducing shares is an inherent right of shareholders in essence.Less reduction can bring additional benefits to shareholders and promote the flow of shares of the company without affecting the company and the market.However,the clearance reduction in a short time will cause great interference to the company and the market.It will not only have a great impact on the economic interests and investment decisions of small and medium-sized investors,but also lead to certain turmoil in the stock market.In this context,this paper chooses Focus Media’s major shareholder reduction in 2017 as the research content,analyzes the motivation behind the major shareholder reduction and its many impacts,and puts forward some suggestions and measures.In the specific research process,this paper mainly uses the methods of literature analysis,case study and financial data analysis to study and analyze the reduction behavior of major shareholders of Focus Media.Firstly,this paper summarizes the relevant literature of domestic and foreign scholars on the motivation and economic impact of major shareholder reduction,and defines and states the relevant concepts and theoretical basis.Then,it combs the whole process of Focus Media from privatization delisting in 2013 to backdoor listing in 2015 to large-scale major shareholder reduction in 2017 from two aspects of company profile and specific reduction.Secondly,using the case study method,this paper studies the motivation of shareholder reduction of Focus Media and the manipulation behind it.In terms of motivation,this paper thinks that the motivation of the major shareholder of Focus Media is mainly divided into four levels: first,from the macro-economic and policy point of view,China’s macro-economy is in a low state of operation,and although there are new policies and regulations for the major shareholder’s reduction,there are still some imperfections;Second,from the perspective of the stock market,the stock market fluctuated greatly from 2015 to 2017,and it was extremely unstable.At the same time,since Focus Media went public through the backdoor,its share price and market value were overestimated to some extent.Third,from the perspective of benefits,major shareholders can obtain nearly 10 billion excess returns from the reduction behavior,which is enough to support their clearance reduction behavior.Fourthly,from the micro-perspective of enterprises,the current operating conditions and future development prospects of Focus Media are not optimistic.Whether from the perspective of avoiding risks or obtaining hedging benefits,it has promoted the occurrence of major shareholders’ reduction.In order to promote the smooth and effective reduction of holdings,major shareholders balance the stock price by cooperating with the favorable announcement release time;By reducing holdings in stages and taking advantage of information,we can avoid the adverse effects brought by the announcement of reducing holdings.Then,through analysis,it is found that the reduction of the major shareholders of Focus Media in2017 has brought great influence to the stock market,Focus Media and large and small shareholders.From the point of view of the company and the market,this reduction has not only dealt a blow to Focus Media’s share price and brought negative effects to the company’s financial performance,but also affected the trend of the whole A-share market and adversely affected the stock spot market.From the perspective of large and small shareholders,it has brought tens of billions of net income to the major shareholders who have reduced their holdings,and at the same time seriously damaged the economic interests of small and medium shareholders.From the perspective of Focus Media’s future development strategy,although this reduction has brought a certain degree of negative impact to Focus Media in a short time,it has also prompted Focus Media to introduce new strategic investors,such as Internet companies represented by Alibaba,which broke the previous situation in which Jiang Nanchun integrated corporate governance rights,optimized the company’s shareholding structure and laid a solid foundation for the long-term development of Focus Media.Finally,on the basis of the above research,this paper puts forward relevant policy and system suggestions from three aspects.First,strengthen government supervision and strictly refine the relevant systems for major shareholders to reduce their holdings;Second,improve the relevant exit mechanism of financial strategic investors and optimize the internal governance structure of the company;Third,encourage small and medium-sized shareholders to invest rationally and achieve mutual benefit and win-win through mutual information exchange and mutual help.