Study On Manipulation Of Stock Price By Major Shareholders Of Listed Companies In The Process Of Stock Reduction

After the reform of non-tradable shares in 2005,non-tradable shares could be bought or sold in the secondary market,and the controlling shareholders could obtain profit from the price difference by buying and selling shares.Since 2006,the quantity and amount of stock reduction in Shanghai and Shenzhen market continue to rise.In order to gain more profit in the process of stock reduction,major shareholders of company tend to use a variety of stock price manipulation methods which are not easy to be detected by regulators and the public.To protect the benefit of small and medium shareholders and promote fairness and effective operation of the market,this paper takes the case of Cloud Live Tech Group as an example to study this kind of behavior.Firstly,this paper sorts out relevant systems of major shareholders when reducing their holdings,and introduces relevant theories,then sorts out relevant domestic and foreign literature.After that is the mechanism of stock price manipulation in the process of stock reduction.Starting from dynamic factors,this article introduces three stock manipulation methods in the market today,and summarizes the possible consequences of stock price manipulation.In the case analysis part,this paper takes Cloud Live Tech Group as the research object.After analyzing the strategic motivation and cash-out motivation of reducing holdings,this paper introduces the stock price manipulation process in three stages of reducing their holdings in detail and uses the event research method to verify.Since the company’s insiders have sufficient information advantages,it is easy to achieve high-level accurate reductions and damage to other small and medium shareholders.Subsequently,this article analyzes the impact of stock reduction from the perspective of short-term market reaction,long-term market reaction and financial performance.It is found that the manipulation of stock price will have a negative impact on enterprises in the short term and long term,and will cause the stock price to be inflated,which will lead to the mismatch of social resources,and is not conducive to healthy development of the market.Finally,in order to prevent stock price manipulation,this article puts forward corresponding management advice from three aspects:company’s internal governance structure,improvement of laws and regulations,regulatory concept and methods of regulators.Hoping the research of this paper can be used as a reference for the regulatory authorities to effectively protect the rights and interests of stakeholders.