Research On Market Reaction And Influencing Factors Of Executives' Stake-raising In China's Listed Companies

With the gradual completion of the reform of non-tradable shares of listed companies and the promulgation and implementation of the measures for the management of the listed company equity incentive,the phenomenon of executives'stake-raising is more and more common,and also is concerned by securities regulators and market investors.Corporate executives know more about the value of the company than ordinary investors,so their holdings will become an important market signal that will have an impact on the company's share price.The question to be studied in this paper is what kind of market reaction will the senior executives have to increase their holdings?What are the important factors that depend on this market reaction?This paper takes 6061 executives' stake-raising events of the first increase in the year from 2006 to 2016 as the sample,and uses the Event study Method to study the market reaction of the senior executives' stake-raising by the average abnormal return rate and the cumulative average abnormal return.The research shows that after the increase of the stake-raising,the average abnormal return is positive in the short-term,and then the cumulative average abnormal return decreases.The positive effect of executive stake-raising behavior on stock price has a short-term effect.Then,this article from the increasing number of holdings,how to increase holdings,who to increase,and when to increase the four aspects,to study the impact of different factors in the market reaction of the stake-raising.The study found:The greater the proportion of the executives' stake-raising,the better the market reaction of the executives' stake-raising.The way to increase holdings for the bulk trading and equity incentive rather than the auction and secondary market trading,the market reaction is better;When the stake-raising personnel are senior managers instead of supervisors and directors,the market reaction of the stake-raising is better.Stake-raising occurs in bull market rather than shock market or bear market,the market reaction of stake-raising market is better.Then,this paper uses the multifactor analysis method to take the cumulative abnormal return of 15 days after the executives' stake-raising as the explanatory variable,the above four factors are virtual variables,and select the company size,book market value ratio,financial leverage ratio as the control variables to analyze the factors that affect the market reaction of the executives' stake-raising.The results showed that the proportion of stake-raising,the way of increasing the holdings and the timing of the increase were more significant,and the empirical results were in accordance with the theoretical expectation.The influence of the type of stake-raising personnel on the market reaction is not consistent with the theoretical expectation.The company's financial indicators have no impact on the market reaction.Finally,this paper tests the robustness of the different windows.The research shows that the market reaction of the executives' stake-raising is decreased after the window period is lengthened.According to the research results of this paper,the following countermeasures are put forward:first,the listed company should make reasonable use of the market effect of executives' stake-raising to promote the stock price to return to the reasonable level.To optimize the choice of the increase amount,the stake-raising's mode and its timing.Second,investors should rationally treat the behavior of senior executives' stake-raising,reasonably grasp the investment timing and investment period in investment strategy,avoid blindly following the trend and avoid investment risk.Third,the supervision layer should set up the policy of increasing and reducing holdings,and keep the continuity of policies.