A Case Study Of Shareholder Structure Arrangement And Major Shareholders' Reduction Behavior In Wanbangda

In Chinese stock market,many large shareholders of listed companies abuse their control power to achieve excess returns by malicious reduction.The Wanbangda selected in this paper is one of the typical cases.This paper makes a detailed analysis of the shareholder structure arrangement of Wanbangda,and makes a comprehensive analysis of the motivation,process and consequence of the reduction and arbitrage of the major shareholders.This paper finds that Wanbangda has set up an artful shareholder structure arrangement,which takes the form of major shareholder's family members holding shares but not working as any directors,supervisors,or other managements' positions in the Company.This arrangement brings the convenience and concealment in major shareholders' reduction behavior.Through the comparative analysis of Wanbangda's financial performance,this paper finds that the company has poor profitability,lacks investment opportunities and profit growth point,the major shareholders are not optimistic about the long-term development of the company.Under the pressure of poor performance,the shareholders choose to reduce shares to get cash.In the process of reduction,Wanbangda continuously pulled up the company's stock price by frequently releasing good news,implementing a high-transfer and dividend policy and requiring brokerage researchers to issue a large number of recommended reports.As a result,the major shareholders realized gains of RMB5.8 billion by precise reduction and arbitrage at the peak of the stock price,while the small and medium-sized investors suffered heavy losses in the final.The reduction of major shareholders has brought adverse consequences to the company: the financial data in 2014 is suspected of fraud,subsequent performance declines and volatility is greater;borrowing and financing capabilities and asset quality decline.Other adverse consequences include that the stock price keeps depressed,and the management team is instable,with frequent resignation,affecting the company's follow-up operations.Through the case,this paper reminds small and medium investors to be alert to similar malicious reduction of major shareholders,and suggests that investors should learn some professional knowledge,enhance risk awareness,and use professional teams to assist investment.It aslo calls on regulatory authorities to strengthen legal construction and supervision,strengthen and improve the disclosure requirements of listed companies,take measures to ensure listed companies disclose financial statements accurately and truthfully.