Internal Control Quality, Ownership Concentration And Reductions Of Non-Tradable Shares For The Listed Companies In SME Board And GEM

Under the influence of China’s macro economic policy and the overall market environment, in order to carry forward the spirit of independent innovation, China in Shenzhen the 2004 and 2009 has set up the SME board and GEM market. The establishment of the two sectors to the capital market of our country has been supplemented and rich. SME board and GEM market listing Corporation generally has the characteristics of strong profitability, revenue growth of Xing Qiang, it has long been known as the China "NASDAQ market. With the rapid growth of the two sectors, the SME board and the GEM market has occupied a very important position in the Chinese multi-level capital market. China’s capital market is also gradually become a complete capital market system. By the end of 2014, the SME and medium-sized plate market listing Corporation, a total of 739, the market value of nearly 9 trillion yuan, the GEM market listing Corporation reached more than 400, the market value of nearly 1 trillion and 300 billion. However, with the rapid development of the two sector market at the same time, the market cap ban reductions shares after the reduction of the quantity and value is also growing. This series of a large number of restricted shares lifted reduction behavior, disrupt the normal order of the development of the SME board and the GEM market, caused huge losses to the majority of SME and medium-sized shareholders. Is also a serious blow to the two plates on the market investor confidence. So the SME board and the GEM market cap on sale of shares of restricted shares lifted holdings behavior should be aroused the attention of scholars.The SME board and GEM market non-tradable shares of large-scale reduction behavior, this article mainly from the two aspects of research:first, this paper studies the company’s ownership concentration and non-tradable shares to the relationship between reduction; the second is the company’s internal control quality of ownership concentration and non-tradable shares to reduce the influence to the relationship between.Firstly, through literature review and theoretical analysis that higher ownership concentration degree on the operation and management of the company will be more cause adverse effects, higher ownership concentration will caused company exists the phenomenon of one stock’s dominance, shows that the company’s major shareholders on the company’s substantial control more, on a series of the company’s business decisions can play a crucial role. Therefore, large shareholders may be through the restricted shares reduction for SME and medium-sized shareholders, to gain control of their own self-interest caused serious losses, will ultimately result in the performance of the company. So this paper proposes a hypothesis that ownership concentration and non-tradable shares is positively related. Through further analysis of the literature and theory in this paper, the internal control can effectively solve the agency problem in a certain extent. On the one hand, the company can effectively reduce operating costs, on the other hand, can effectively prevent the company may face a series of financial risk management, etc.. So, when the company has a relatively high level of internal quality control, the performance in the future the company will tend to a better direction, but also will be faced with a relatively low market risk and management. So, in a good internal control system to ensure that large shareholders may prefer to hold stocks, long-term interests, rather than through the reduction of access to non normal interest. So, this paper proposed a hypothesis of two, the company of good quality of internal control and ownership concentration and positive correlation between the holdings of restricted shares lifted has obviously inhibitory effect. The research method, this paper makes full use of the method of normative research method and empirical research. By empirical research methods as the main research method, this paper through the wind and CSMAR database, select the 2010 and 2014 the SME board and GEM occurred non-tradable shares reduction of holding companies as the research sample, a total of acquiring the 989 valid samples. Then make a detailed descriptive statistics and regression analysis on 989 sample data acquisition.Through rigorous empirical analysis found that, company ownership concentration and non-tradable shares holdings have a significant positive correlation, high ownership concentration degree on the operation and management of the company will more to cause adverse effects, higher ownership concentration will caused company exists the phenomenon of one stock’s dominance, large shareholders may will pass the non-tradable shares holdings to seek the interests of SME shareholders, to gain control of their own interests. And in a different angle analysis, if the listed companies in the largest shareholder shareholding proportion is too large, other shareholders will not because of the large shareholders in the amount of the reduction and the impact of large shareholder in the company had been in a position of absolute control, so higher ownership concentration, prompted a major shareholder through the non-tradable shares to reap the benefits.According to the company’s internal control quality concentration were studied and effects of limited sale of shares on the relationships between equity. The empirical results show that the quality of internal control and ownership concentration is positively associated with restrictions on reductions shares of the effect has obvious inhibitory effect. That is to say, with respect to the internal control of the company with high quality, low quality control within the company, ownership concentration degree on the positive impact of restrictions on reductions shares will be greater.