Research On The Motivation And Economic Consequences Of Reducing Stock Holdings By Major Shareholders Of J&R Optimum Energy Company

The non-tradable shares cannot meet the requirements of the reform and opening up of the capital market and the stable development of the capital market.The reform of nontradable shares is A measure taken to solve the problem of interest balance between relevant shareholders in the a-share market.This reform has ended the long-standing situation of nontradable shares and non-tradable shares.In listed companies,non-tradable shareholders usually choose to pay the consideration in order to recirculate the non-tradable shares..Since the implementation of the full circulation reform of stocks,the major shareholders of listed companies,whose profit paths have changed significantly,have shifted their focus from the change of corporate net assets to the change of stock price in the stock market.However,China’s securities market is gradually development,system such as the relevant laws and regulations have not yet perfect,the function of the market restraint mechanism is relatively lacking,the content of the management mechanism is imperfect,and the transparency of market information is poor.in case of company’s business situation,big shareholders is usually not try to think of some way to solve the company encountered difficulties,but a "struggle" to use its own financial advantage,information advantage as insiders have bid up the stock prices,such as by selling their own hands a large number of stocks,in order to obtain high yield.It is because of this that the frequency of major shareholders of listed companies to bring down holdings is becoming higher and higher.However,the behavior of major shareholders has a very bad influence,which affects the company’s brand image and the legitimate interests of small and medium shareholders.As a result,minority shareholders have lost their trust in the stock market,the development of the Chinese stock market has been seriously affected,and certain behaviors of major shareholders need to be regulated in order to reduce their shareholdings.This paper takes J&R Optimum Energy Company as the research object.The main reason is that the major shareholders of the company have concentrated time,high frequency and large amount of money to reduce their holdings,which is highly representative,and the consequences of reducing their holdings have brought serious negative impacts to the market.In this paper,the event study method and the synthetic control method are adopted to analyze the reduction behavior of major shareholders of J&R Optimum Energy Company,as well as the reasons of the reaction of the secondary market to the company’s reduction after the reduction,so as to analyze the necessity of regulating the reduction of major shareholders.Through the analysis,it can be seen that the financial operating situation of J&R Optimum Energy Company is not good.After major shareholders reduce their holdings,the stock price has been declining compared with that before the reduction.At the same time,this paper adopts the synthetic control method to examine the star enterprise J&R Optimum Energy Company as the gem.Due to the asymmetric information,the major shareholders deliberately covered up the major bad news by lagging the disclosure time of the 2017 annual report,so as to cover their high-level escape.Therefore,the poor performance prospects,the major shareholders to meet the high reduction and information asymmetry can be regarded as one of reasons for major shareholders to bring down their holdings.Before they reduce their holdings,the target company will also obtain a higher excess rate of return.When the major shareholders reduce their shares,the excess return rate of the company turns from positive to negative,indicating that the behavior of the major shareholders from listed companies will have a negative impact on the secondary stock market in a short period of time.In the long run,the BHAR value of major shareholder’s reduction is basically negative.It can be seen that major shareholder’s reduction brings significant long-term negative effects to the market.Finally,this paper bases on the two levels of internal management and external supervision and studies the relevant policies that can have a restrictive effect on the trading behavior of major shareholders.