The Market Reaction Of Group Companies' Holistic Listing In China

Due to some historical reasons, most listed companies in China are the high-quality parts of assets divided from their group companies, which leaves many potential problems for listed companies'operating and the stock markets in China. However, as a major institutional reform, holistic listing can solve the benefit conflicts between majority shareholders and listed companies. After TCL group was listed as a whole in September of 2003, holistic listing has become the most popular topic in the stock markets of China. In this context, it is significant to study the market reaction of group companies'holistic listing in china.In this paper, the models of cumulative abnormal return rate with its significance test have been established based on some earlier research results. And the listed companies which have declared holistic listing between September 30th of 2003 and December 31st of 2008 have been chosen as research samples. It has analyzed the stock market reactions of group companies'holistic listing through the event study method. The main conclusions of this paper are as follows:(1)The event of declaring holistic listing has led positive responses in stock markets, and the nearer to the date of declaring, the more significant of its positive response. It shows that holistic listing is considered as major good news by short-term investors, and this event can bring positive wealth effect for them.(2)The positive responses led by companies which listed as a whole through directional add-issuance is stronger than those through other methods. This result is useful for other companies to draft their holistic listing schemes, and the government should promote this method through some policies.(3)It shows that there is some extent of information leakage about the event of holistic listing declaration in our stock markets. In order to ensure our stock markets develop healthily and orderly, the supervision department in China should take further effective measures to standardize information disclosure of listed companies.