Study On The Timing Choice For Large Shareholders Reducing Share-holdings

Reducing shareholding,which refers to the shareholders who hold more than 5%shareholding selling stocks through the second market or block trading in a legal way,is an important access for large shareholders to achieve profits.Comparing with the foreign large shareholders reducing holding-shares,the domestic ones can earn more excess profits and have more competitive ability to handle chances.Compared to the research in the past several years,the excess profit earned by reducing holding-shares is decreasing,which illustrates that to some extent it is harder and harder for large shareholders to obtain profit through this way.This paper selects the large shareholders reduction events as research samples from 2010 to 2015 on China’s main board and small board.Through the event study method and regression analysis research methods,we can find that:(1)Large shareholders can obtain significant cumulative abnormal return through reducing holding-share,indicating that the reducing of holding-shares for large shareholders can earn huge profits,existing the phenomenon of choosing opportunities;(2)Large shareholders,especially the high proportion of shareholding and non state-owned large shareholders tend to reduce shareholding in bull market or when the company is difficult.While these stock holders rely less on the change of market estimated value;(3)The shareholders who have high proportion of shareholding or are non state-owned are more capable to choose reducing chances,and can also obtain more excess profits in bull market or when the company operating well;(4)Large shareholder not only choose the time of reduction in the reducing process,but also the time of disclosing the announcement of the reduction.These large shareholders who disclose the announcement of reduction of large shareholders in non-trading day can gain higher excess profits.