On Motivations And Economic Consequences Of Large Shareholders’ Stock-Selling

Stock-selling of large shareholder is an important factor affecting the stable development of the entire securities market.Standardizing and controlling large shareholders’ stock-selling plays an important role in maintaining the stability of the securities market and protecting the interests of small and medium investors.The main board,small and medium-sized board,and the GEM are all part of the multi-level capital market,which has played a huge role in promoting the development of the entire capital market.However,with the rapid development of major sectors,there are various problems that need to be solved,and the issue of large shareholders’ stock-selling is one of them.Leshi has developed rapidly on the GEM.However,in 2015,the large shareholder of Leshi,Jia Yueting,carried out a huge stock-selling,which caused widespread concern at one time.It has become a precarious situation,which has led to discussions in various circles.It is worthy of us.Exploring the underlying reasons behind it,this article will use the listed company Leshi as a case study to analyze large shareholder’s stock-selling behavior.This article uses the case study method to conduct research on the case of Leshi.This paper is divided into six parts.The first part is an introduction,which explains the research background,research significance,literature review,research structure and methodology.The second part is the theoretical basis and institutional background.This paper introduces the theory of large shareholders’ stock-selling and the institutional background of reduction.The third part is a case study of Leshi’s large shareholder’s stock-selling.First of all,we will introduce the company profile of Leshi,the shareholding of large shareholders,and the company’s operation,and then review the case of large shareholders’ stock-selling.The fourth part focuses on the analysis of the possible motivation and economic consequences of large shareholder’s stock-selling of Leshi and causes of bad economic consequences,including market reaction after large shareholder’s stock-selling,the impact on listed companies and the interests of shareholders,and causes of bad economic consequences.The fifth part studies governance advice on large shareholders’ stock-selling,it mainly includes advices for listed companies,regulatory authorities,and small and medium shareholders.The sixth part is the conclusion and suggestion section,which expounds research conclusions,innovations and shortcomings.Through the case analysis of Leshi’s large shareholders’ stock-selling,this paper draws the following conclusions: Firstly,motivation of large shareholders’ stock-selling is to mitigate funding needs,to introduce strategic investors,company’ valuation is relatively high,ownership concentration is high,and that market risks is high;Secondly,there are five economic consequences of large shareholder’s stock-selling,large shareholder’s stock-selling causes negative market reaction,and worsens company’s solvency index,large shareholders’ stock-selling damages the interests of the small and medium shareholders,and large shareholders’ stock-selling obtains private cash income.Thirdly,there are two causes of bad economic consequences.it includes lack of external supervision of the company and imperfect corporate governance mechanism.The innovation of this paper is to use case studies to solve the shortcomings of the previous empirical research not to reveal details very well.Previous scholars’ research on large shareholders’ stock-selling is basically an empirical study.The details of the process of stock-selling,the way of stock-selling and the impact of stock-selling are not enough.It is difficult to focus on the specific practical problems of the company.and directly guide practice.Therefore,this paper uses case study to enrich the content and research methods of relevant research on large shareholder’s stock-selling,and has a strong practical guiding significance.