The Effects Of The Connected Transaction Of Listed Company’s Senior Executive On Stock Prices

Along with the deepening of stock market reform, the percentage of industrial capital in free float market capitalization has risen from 5% to 50% since 2005. The pricing power of industrial capital in the capital market is also increasing; its moving trends dominate the direction of secondary market. The research of how industrial capital movement influences the stock price will help us understand the behavior of industrial capital shareholders and analyze the investment logic of stock market.Since the abrogation of the limit on GEM listed companies’s senior managers’ restricted stocks, the majority of the shareholders reducing their shares for cash, only a few prefer to increase their shareholding. Most people believe that the main reason for this phenomenon is the high issue price, IPO P/E ratio and financing capital during stock issuing.Besides, the poor management, the huge difference in stock performance before and after issuing, the uncertainty in the growth of the company, the effect of national policy also account for it. As the actual controller of GEM. senior managers have full control over the operation of the company, which offers them cutting edged information and deep understanding on the prospect of the industry and economic situation. Therefore they have the advantages on getting inside information and doing value judgment. The changes, increase or decrease, on GEM senior managers’stock holding and the reasons behind has been always a focus for financial researchers and the security investors.The thesis takes the senior managers of GEM listed company(including CEO,supervisor and other senior managers) as its study subject, analyzes the relations of the movement of their industrial capital and the stock price. In the essay, the Industrial capital mainly includes controlling shareholder, major shareholder (including non-controlling share holders and large shareholders) and managerial ownership.The change of the stock price refers to the stock price fluctuation in a given period (daily, weekly, monthly, quarterly or annually), which is related to the fluctuation range and frequency of increase& decrease of shareholders, and is always after the fluctuation of the stock.During the empirical analysis, the author collected and processed the related data and theory on GEM listed company. The samples are taken from the GEM listed company in which stock increase& decrease happens, including the senior managers’ increase& decrease ratio, the shareholding ratio of the No.l shareholder on the increase& decrease day, frequency of the increase& decrease in a week, the PE ratio of the last season of the increase& decrease day, the gross profit ratio of the last season of the increase& decrease day, the education background of the senior managers, etc. By using Eviews6.0 and SPSS for correlation analysyzing on sample data, the author finally get the conclusion and suggestions.The research shows that when senior managers sell large amount of stock, the related share price reaches its top,usually 10-15 working days before the data reaches its top. The increase of senior managers usually happens 5-10days before the data reaches its bottom. When senior managers buying shares,the frequency they buy, their education level and changes in the fund shareholding ratio((fund shareholding ratio of this season-fund shareholding ratio of last season)/fund shareholding ratio of last season) have more influence on CAR.When senior managers selling shares,PE ratio of last season has more impact on the frequency they sell shares in a week.