| As we all know, many years ago, there are two different kind of shares in China.One of them is tradable share and the other is non-tradable share. But the non-tradable shares can not be traded in the Chinese stock market as the tradable share did. So this unfair situation must be changed. The implementation of tradable share reform starting in 2005, breaking the dilemma between tradable shares and non-tradable shares with segmentation of the listed companies, so that the listed company’s original non-tradable shares gained the right to circulate in the secondary market. With the advent of the era of tradable shares, profit mechanism for shareholders of listed companies has also undergone a significant shift from a concern over net assets steering the secondary market stock price changes. The major shareholders have also tended to make the advantage of financial, information and so on to raise the stock price and earn money. Eventually, the major shareholder is the way to achieve gains in the secondary market holdings of shares. For this reason, more and more frequently holdings of major shareholders, a move that also seriously affected the normal development of China’s stock market, it is imperative to regulate the behavior of major shareholders.There is a bull market in 2015, the LETV’s performance is quite attention, while making its major shareholder Jia Yueting holdings also cause for concern. Since the secondary market investors believe that large shareholders for the company’s operations have absolute information superiority, and therefore major shareholders transfer market behavior usually give negative news about the company’s prospects. At the same time, music Watch the share price to rise all the way, then the controlling shareholder of the reduction is to the market management does not deliver a message of good faith, sparked intense discussion about the market value and the intrinsic value of music Watch is consistent. Liu Shu Wei’s analysis pushed the holdings of behavior to the pinnacle of public opinion. Therefore, this paper use LETV as the research object, using the event study and regression model to analyze the deep-seated causes and the impact on the stock markets after the reduction behavior. While the introduction of contagion analysis to verify that industry leaders negative news will affect the entire industry changes in the stock price. And thus the need for standardized analysis of holdings of major shareholders. The results showed good prospects of LETV’s business performance, the company’s management with higher moral level, major shareholders rallies reduction behavior does not exist, neither is the former shareholders holdings motivation. Because of the corporate strategy, the need to develop ecological layout, the company introduced new strategic partners through the equity transfer.Meanwhile, because the company needs capital, major shareholders reducted share holdings to get free money and lend funds to the company used as operating, this behavior can be considered as a new form of major shareholders of listed companies transfer of their own benefits to the listed company. At the same industry with the same contrast LETV earnings and accumulated gains, you can see, music Watch the share price is overvalued risk is relatively high, which led to more reasons for the high valuation risk can not be determined, therefore, the stock is overvalued It can be seen as one of motivation Letv large holdings of shareholders. Because the case occurred a short time, we can not found the real cause of all their holdings, but further study of its holdings of reasons, it can help us have a basic cognition of the development of LETV. LETV belongs to Internet industry companies, and these companies with different characteristics of traditional industry companies is particularly expensive, and layout of all R & D funding needs to be supported by money, so the short of profits or losses of such companies and the industry can not fully explain it this time business conditions and development prospects.As a consequence of behaviour, a certain period of time before the major shareholders holdings of shares, the listed company will be there is a positive or a relatively high excess returns, while shares after the reduction is complete, the excess returns gradually disappear, indicating that holdings of major shareholders will show a negative reaction to the market in the short term. However, we also can be drawn by comparing, the same share holdings, when the company showed that major shareholders for the company’s transfer of benefits or other forms of business confidence in the reduction of the announcement, the secondary market for the company’s response was relatively more positive. Holdings of major shareholders not only have a negative impact on their own company, while the other companies in the industry will also be affected by the target company’s share price has negative short fluctuations, indicating the presence of industry contagion effect. But by comparison we can find, in the first reduction behavior, other companies in the same industry more competitive effect is reflected, and a second reduction to reflect more contagion effect, indicating that the reduction mode different, will to some extent affect the stock price volatility of other companies in the same industry. Finally, this paper put forward policys to regulate large shareholders’market transactions of listed companies from the internal governance and external supervision. The main recommendations of the internal governance is to establish a sound equity checks and balances system of independent directors, senior managers and improve the incentive mechanism. The main recommendations of the external regulation is to establish and improve the holdings of major shareholders and relevant laws and regulations, establish and improve the information disclosure system, strengthen supervision and related transaction management. |
