Analysis On The Behavior And Consequences Of Major Shareholders' Stock Reduction In Guan Fu

After the China securities regulatory commission issued the regulations on the reduction of shares held by major shareholders and senior executives of listed companies,the phenomenon of reduction of stocks held by major shareholders was somewhat restrained in 2016 and 2017,but the good times didn't last long.This was not a good signal for the market.On the one hand,the number of outstanding shares in the secondary market increased,which increased the pressure of market price;On the other hand,the behavior of selling shares conveyed the informational advantages of corporate insiders to the market,which leads other shareholders with tradable shares to further reduce their holdings in order to avoid personal losses.At the same time,the behavior of major shareholders' reduction also become varied in form,such as bridge reduction,accurate reduction,clearance reduction,stock reduction in exchangeable bonds and so on,which seriously disturb the order of capital market and distorted the mechanism of fair market.These behaviors not only againsted investors to preserve the own lawful rights and interests,but also being more bad for the smooth development of China's capital market construction and order.After the reform of the shareholder structure,the regulators and investors also pay close attention to this behavior.Major shareholders' reduction are legal rights,however,because of the raise of the concealment and complexity of its purpose and the way,the difficulty of monitoring,early warning and risk prevention may be further upgraded.Recently,the capital market is in a stage of rapid development in China,even though the provisions of the major shareholders holdings are increasingly strict,but regulators in complete inspections and illegal punishment of distance still has a long way to go.Based on the signaling models,principal-agent theory and private benefit of control,this paper select GuanFu corporation as the case study object,by analyzing the background of major shareholders' reduction and the motivation of unloading bonds to understand the path of its reduction.In the meanwhile,financial effects analysis and non-financial effect analysis is used to evaluate the consequences of their behaviors.The thesis is divided into five parts.The introduction mainly introduces the background,the significance of the research and comprehensively introduces the academic researches on the motivation,implementation path and timing of major shareholders' reduction.In the second part,the behavior,characteristics,methods and timing of the reduction of the major shareholders are defined.The third part is caseintroduction,which introducesthe basic information,the background of the reduction,the reduction plan and the pledge of stock rights of GuanFu co.Ltd during the period in detail.The fourth part analyzes the motivation,implementation path and effect of the reduction of the majority shareholder of GuanFu.Finally,through the case analysis of the reduction of the majority shareholders,the research conclusion and enlightenment are drawn.Through analyzing,it is found that the motivation of the major shareholders of GuanFu to reduce their holdings is not as published in the announcement,only to alleviate the shortage of funds of the company or individuals.The most fundamental purpose is to win the favor of the market through earnings management,releasing good news so as to cash out and obtain the excess earnings.Although,from the objective point of view,part of the capital invested in reducing the holding alleviates the financial pressure of the company to some extent,the positive influence did not last long due to the short-term behavior of the management of GuanFu in business activities,and the company was also in a development deadlock due to the violation of the major shareholders of GuanFu co.Ltd.Therefore,listed companies should formulate a reasonable strategic layout,improve the internal governance structure,regulatory departments should keep pace with the times,improve relevant laws and regulations,and establish a sound evaluation mechanism.