The Study On Market Value Management Of Listed Companies And Securities Market Manipulation

It is clearly pointed out in Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market that listed companies are encouraged to establish market value management system and practices of listed companies in carrying out market value management are fully affirmed, which is the first time that market value management is included in a state-level document concerning design of the top-level system of the capital market and makes China’s capital market usher in an upsurge of theories and practices in market value management. Based on overall observation of the market, many listed companies managed to drive their market value to grow rapidly and improve their core competitiveness through various market value management tools such as merger and acquisition and reorganization, dividend sharing and allotment of shares, management of investor relations, increase in shareholding of major shareholders, share repurchase of listed companies, block trading, stock option incentive and crossover transformation. Core of market value management lies in improving quality of listed companies, including safeguarding legitimate rights and interests of all shareholders of listed companies, maintaining consistency of interests of shareholders and management, establishing long-term development strategy and supporting long-term development of companies by using various capital instruments based on laws, through which market value can reflect the real intrinsic value of a company, and maximization of value creation and value realization and optimization of value operation can be realized.However, market value management in practices is going through the situation that legal concepts are being illegally abused, in which some market value management methods such as increase in shareholding and repurchase, merger and acquisition and reorganization, stock option incentive and restructuring & governance may lead to some problems including information disclosure, market manipulation, account management and compound violation of laws and regulations, and these problems make market value management being challenged in aspects of legality and effectiveness. Characterized by various means, covertness and difficulty in investigation, market manipulation in the name of market value management is closely related to joint manipulation through collaboration of the inside and the outside, false disclosure and insider trading. In this paper, comparative analysis method is used to compare commonly used methods of market value management and market manipulation techniques and find out relations between them. There exists a misunderstanding about market value management of listed companies, which refers to that market value management is simply considered equal to maintaining share price. Market value management should be based on stock price, for which irrational fluctuation of stock price should be restrained, which in no way equals to raising stock price, or even manipulating stock price. However, market manipulation behaviors in whatever means or confusing disguises aim to make profits through manipulation of stock price. Put it this way: Market value management and market manipulation both attach importance to stock price of a company. Therefore, stock price becomes the connecting point between these two behaviors with totally different natures. Because of this connection, illegal means of market manipulation, disguised as legal market value management, can confuse the public and escape from regulation on purpose.Through empirical study on various fake market value managements emerging in the security market, two modes of fake market value management are summarized in this paper: Firstly, some listed companies cater to market speculation. Information disclosure, merger & acquisition and reorganization by listed companies aiming to cater to market speculation are commonly seen, through which such companies take advantage of the situation that immature market investors pay no attention to fundamentals and financial indicators but trust in inside information and are interested in conceptual speculations. By taking advantage of such unhealthy atmosphere, these companies can often reach the goal of making their stock prices soar in a short period through using the latest and most popular conceptual themes. Secondly, some listed companies and private placement agents manipulate stock prices jointly by serving as market makers in the secondary market, which equals to some trade-based manipulations such as manipulation through continuous trading, manipulation through agreed trading and scalping. Disguised as market value management, such manipulation methods are more confusing. Therefore, in this paper, market manipulation in the name of market value management has the essence of: Information manipulation + trade-based manipulation.Market value management programs of many listed companies are distorted in practices. In this paper, it is pointed out that the reasons why some chaos such as manipulation of stock price and conceptual speculation occur frequently include that some listed companies lack the awareness of market value management and market value management strategies, and the market lacks organization system and evaluation system for market value management. Although the market has a certain degree of awareness about market value management, there is no clear description on objectives, standards, means and baseline of market value management and no guiding specifications on definition and practice of market value management, which restrain effective investigations on illegal activities concerning market value management. Chaotic phenomena concerning market value management express higher requirements on regulatory departments, so such departments should issue guidelines for the market value management industry, establish standards for access of market value management organizations, improve information disclosure system and increase severity of penalties for the purpose of handling cases concerning market manipulation in the name of market value management.