Unlocking Of Restricted Stock And Disclosure Of Selective Information

Along with the development of China's capital market,a growing number of enterprises have chosen to apply restricted equity incentive plan to inspire the senior executive to improve performance.Nevertheless,the disadvantages of this kind of motivation mode have gradually emerged in the process of wide application.In state enterprises or private enterprises that have excessively separated equity,the shareholders are absent at the position or shareholders have relatively weak control rights,and relevant motivation regulation is not complete in addition with imperfect internal management structure,which has led to that the management level takes in charge of enterprise's operation decision as well as the controlling power.When the senior executives have been selected as the motivated objects,whether will the motivated objects,which are rational-economic man,conduct selective information disclosure behaviors to influence the share price for ensuring the maximization of their own interests? Nevertheless,problems of the aforesaid aspect have not attracted the attention of scholars.Thus,this paper conducts in-depth research and conclusion in aiming at the selective information disclosure problem in the unlocking stage of restricted stock.In applying case study method,this thesis carries out a specific analysis of ABC company;analyzes the causes of selective information disclosure of management level in combination with enterprises' equity structure,governing structure as well as relevant theories;meanwhile analyzes information disclosure that is based on periodical reports and temporary reports in coordination with event study method.As for periodical reports,the latest financial data around the unlocking day is used to analyze the fluctuation situation of link relative ratio and year-on-year ratio of studied enterprise's net profit growth rate,discovering that the growth rate before unlocking day is negative and is positive after the unlocking day;as to the temporary reports,this thesis selects 10 trading days before and after each temporary day,calculates the CAR(-10,10)for studied enterprise during this ten-day period.If the cumulative abnormal return of the total 20 days before and after the announcement day is negative,the temporary report is bad news,while otherwise the temporary report is good news.“Good news and bad news” before and after the unlocking day are respectively counted and it is discovered that the number of bad news before the unlocking day is way higher than that after the unlocking day;and the number of good news after the unlocking day is remarkably higher than that before the unlocking day.The analysis of relevant reports before and after the unlocking day shows that senior executives in the studied enterprisehave conducted selective information disclosure behavior at the unlocking stage of restricted stock.A further analysis is conducted towards the fluctuation situation of studied enterprise's cumulative abnormal return before and after the unlocking day,which is to study the management behavior of management level before and after the unlocking day in combination with the fluctuation situation of accrued profits for studied enterprise as well as corresponding industry.In summary,it could be concluded that senior executives could probably have conducted information disclosure behavior before and after the unlocking day of restricted stock motivation plan on consideration of tax saving,which is that senior executives release bad news before unlocking day to postpone releasing of good news,influencing shareholders' expectation of share price,gradually reducing the share price before the unlocking day.Per the aforesaid,the influence of senior executives' behavior could be discovered.This thesis also puts forward certain countermeasures such as the mechanism to improve internal governance,perfect motivation project as well as motivation regulation,strengthening the supervision and punishment of relevant departments.