A Study On The Effect Of The Shares Reduction Of Insiders On Corporate Performance In Private Enterprises

The reform of non-tradable shares and the revision of company law have created conditions for the reduction of insiders' holding.Since 2006,the number of companies with reduction has gradually increased.The market is usually pessimistic about the reduction of insiders,but will the reduction bring about the decline of the company's performance? The purpose of this paper is to answer this question.We use both empirical analysis and case analysis method.In the empirical study,we select the private listed companies that have been reduced in 2013-2017 as the sample,take the return on net assets after deducting non-recurring profit and loss as the explained variable,and use multiple regression model to study the impact of insider reduction on corporate performance.In addition,in order to further study the impact of shares lessening on corporate performance in terms of different shareholders and enterprises in different life cycle,we conduct group regression according to insider identity and enterprise life cycle.In the case study,we select Hongqi Chain and Ourpalm as two typical cases to study from the aspects of the company's basic situation,reduction process,reduction reasons and consequences.Through the research,we find that from the overall regression results,insider reduction and corporate performance are negatively correlated.From the perspective of the shareholders' identity,the reduction of large shareholders and senior managers has a negative impact on corporate performance,while the reduction of non-executive director has little impact on corporate performance.From the perspective of corporate life cycle,the shares lessening has little impact on corporate in mature period,while the reduction is negatively related to corporate in growing period.Finally,we provide some suggestions for external investors based on the research findings.For the external investors,they can focus on the identity of the shareholders,the company's equity structure,the life cycle,and the competitiveness of the company.