The Motivation And Market Reduction Of Insider Trading In Chinext Listed Companies

Insider trading has always been a hot topic for academics,investment circles and regulators.After entering the eral circulation time,major shareholders can buy and sell stocks in market to achieve their own investment needs.On the one hand,As the typical insider,major shareholders’ behavior in the market can transmit some information to the investors,and play the role of price correction in the securities market.On the other hand,due to the existence of information asymmetry,the major shareholder,as a decision maker and participant in the company’s major issues,is profitable in market transactions,so their trading motives are highly questioned by the market.China’s GEM market as an emerging market,the supervision is relatively weak.Therefore,it is of great significance to study the trading motives and market effects of major shareholders in the GEM market,to deepen investors’ understanding of the motives of insider trading,to improve investment strategies,and to develop corresponding regulatory measures.This paper manually collected the announcement of the increase and decrease of the major shareholders in the GEM listed companies from November 2010 to June 2018,and used the multiple regression method and event research method to test the trading motives of the major shareholders and the market effects.The empirical results show that: the trading behavior of major shareholders in the secondary market is affected by the company’s financial characteristics and market characteristics.From the perspective of the company’s financial characteristics,the probability of the reduction of the large shareholders is high for company with bad performance,smaller growth and low innovation.At the time of the increase,the major shareholders did not consider the current performance level,and paid more attention to the company’s growth and innovation capabilities.In terms of market characteristics,the frequency of the reduction of the large shareholders is higher for the over-valued and high price fluctuation risk.At the same time,the announcement of the increase or decrease of the major shareholder does have a stock price effect.The market believes that the reduction of major shareholders conveys a signal that the company’s valuation is high and the performance is bad,which shows a significant negative reaction.Conversely,They believe that the increase of major shareholders conveys a signal that the company’s valuation is undervalued and the performance is well,which shows a significant positive reaction.Further research found that the reduction of controlling shareholders has brought a stronger and lasting negative impact and the increase of non-controlling shareholders has brought a stronger positive impact.It reflects the heterogeneity of external investors’ response to the increase and decrease of major shareholders in different positions.The research in this paper enriches the relevant literature on insider trading,it can not only provide reference for investors to correctly understand the trading motives of insiders,adjust the corresponding investment strategies,but also provide reference for regulators to formulate effective supervision strategies.