Study Of The Holding’s Reduction Behavior Of LETV Major Shareholders

China’s implementation of the split share structure reform system has changed the listed company’s major shareholder’s profit.Their way of gain benefit has changed from simply depend on the company to gradually shift to the securities market,and their profit has gradually become a joint decision by the securities market and listed companies.But China’s securities market is still in the development stage,relevant laws and regulations are not perfect,market information also has an asymmetric feature.That makes the major shareholders know beforehand the company’s poor management of the case,most often choose to sell large amounts of stock in order to gain more profits,instead of actively discovering and solving company problems.Such behavior by major shareholders not only damaged the company’s reputation,but also bring the negative impact to the company’s business development.At the same time,many small and medium-sized shareholders in China have lost confidence in the stock market,that caused the market can’t develop in an orderly way.This article based on the Principal-agent Theory,Asymmetric Information and corporate governance theory,choose the LETV case.Analysis the motives and timing on LETV’s major shareholders reduce their holdings,as well as the effect of reduction behavior,and get conclusions and inspiration.The whole article has a total of six parts.The first part is the introduction.Mainly introduce the research background and significance of this paper,analyses the motivations and market reaction of domestic and foreign scholars to reduce the behavior of major shareholders,and introduces the research ideas and research methods of this paper.The second part is the theoretical summary of the behavior of major shareholders.This section describes the specific definition of the reduction of major shareholders and the relevant legal requirements,at the same time,it also elaborates the theoretical basis of the timing,motive and the impact on the shareholders’ wealth of the major shareholders of listed companies.The third part is the LETV’s major shareholder’s reduction case introduction.This part first introduce the operating conditions,financial situation and the external environment before LETV’s major shareholder’s reduction,and then introduce the process of LETV’s major shareholders reduce holdings,including information disclosure,specific reduction programs and other matters related to reductions.The fourth part is the analysis of the motivations and timing of the reduction of the major shareholders of LETV.This part combines the domestic and foreign scholars ’research theory,analyzes the motivations and timing of LETV’s major shareholders reduce holdings.The fifth part is the analysis of the effect on LETV’s major shareholders reduce holdings.This part mainly analyzes the economic consequences of the reduction,the impact on the company’s financial indicators and the impact on the shareholders of the company.The sixth part is the conclusion and inspiration.According to the previous analysis to draw conclusions,and put forward to some extent with reference value of the proposal.This paper analyzes the motivations,timing and reduction of the economic consequences of the reduction of the major shareholders of LETV.Through the discovery we found that LETV’s major shareholders reduce holdings is to ease the company’s shortage of funds on the surface,but in fact,they reduce holding want to get excess returns based on information asymmetry under the large shareholders.Besides,LETV’s major shareholders reduce holdings within the time period of employee equity incentive,placement and a series of equity issuance behavior,It can be seen that LETV’s major shareholders reduce holdings is not entirely in accordance with the announcement as disclosed in the idea.After analyzing the holding’s reduction behavior of LETV,we found that if listed companies want a stable and healthy development,they must have an effective corporate governance structure.Only the company’s internal management of each other constraints,the company can stabilize the long-term development.Besides,stock market and the relevant units should strengthen the intensity and intensity of relevant provisions about pre disclosure of major shareholders holdings reduction,and improve the shortcomings of relevant provisions.Also they should improve the protection of small and medium shareholders of the laws and regulations.