Major Shareholder's Shareholding,Earnings Quality And Stock Liquidity

“Liquidity is the soul of financial markets.” The important purpose of the stock market is to provide investors with trading opportunities,that is,to provide liquidity.The stock market plays a core and fundamental role in the long-term capital market.High stock market liquidity is the basis for effective and stable prices of stocks and other derivatives.The existence of information asymmetry makes the high quality financial report essential to the information users.High-quality earnings information can reduce the degree of information asymmetry and thus improve stock liquidity.However,China's listed companies generally have the “singlelarge-holder problem”.The degree of equity concentration reflected by major shareholders' shareholding will have an all-round influence on the company's production,operational and financial decisions,thus affecting the company's earnings quality.Based on the above considerations,this paper attempts to study whether the shareholding of major shareholders affects stock liquidity and whether such influence is exerted through earnings quality.This paper mainly adopts the empirical research method.First of all,the researches of stock liquidity in recent years is summarized to determine the method of this paper.Then,using the annual financial data of A-share listed companies from 2008 to 2016 and the stock market data from May 2009 to April 2018,the paper studies the influence of major shareholders' shareholding on stock liquidity by using the method of multiple linear regression.Then,this paper introduces the mediating variable model to study the mediating effect of earnings quality on stock liquidity.Finally,the samples are divided into state-owned enterprises and non-stateowned enterprises to study the difference between the two samples of the influence of major shareholders' shareholding.The empirical results show that :(1)the higher the shareholding of major shareholders,the lower the stock liquidity.The research results verify the hypothesis that major shareholders' shareholding will increase the degree of information asymmetry and thus reduce stock liquidity.(2)Earnings quality plays an intermediary role in the process of major shareholders' shareholding reducing stock liquidity.In the mediating variable model,this paper finds that the degree to which major shareholders reduce stock liquidity is weakened after the introduction of earnings quality.This shows that earnings quality is part of the mediating variable in the process of major shareholders' shareholding affecting stock liquidity,that is,the impact of major shareholders' shareholding on stock liquidity is partly generated through earnings quality,and this effect is significant.(3)The effect of intermediary variables is different between stateowned enterprises and non-state-owned enterprises.The results show that the mediating variable has more obvious effect on the largest shareholder in the group of state-owned enterprises.In non-state-owned enterprises,the effect of intermediary variables on the three major shareholders is more obvious.This shows that compared with non-state-owned enterprises,state-owned enterprises have a stronger control ability of their largest shareholder and a stronger influence on earnings quality and stock liquidity.In contrast,the top three shareholders of non-state-owned enterprises have stronger control ability and stronger influence on earnings quality and stock liquidity.Combined with the results of empirical research,this paper concludes that the ownership concentration of enterprises should be appropriately reduced to improve the earnings quality of enterprises,so as to reduce information asymmetry and improve stock liquidity.