Research On The Motivation And Effect Of The "Rick-Free" Shareholding Increasing Of Magic Decoration Co.,Ltd

There are many uncertain factors and large fluctuations in China’s capital market.In order to avoid the decline of stock prices,in 2015,the “Rick-Free” Shareholding Increasing as an emerging rescue tool appeared in the capital market.Because of its simple use process,low cost,and can boost the stock price,the market has emerged many times to increase the tide of holding,become the choice of some companies to stabilize the stock price,the initial market has given affirmation to this behavior.Sent out type to increase the initiative of people basic major shareholder for the company,big shareholders itself is endowed with a certain color,its make out type increase initiative behavior caught the attention of the market,but due to the imperfect relevant laws and regulations,combined with the market information asymmetry,the big shareholders using out overweight when there are many negative behavior,who seek personal interests incentive exists,the market controversy,nicknamed the“overweight” fool type.What is the motivation for the large shareholders to issue frequent backend increases? It is an urgent problem to be studied in this paper that the effect of this action is sought after by major shareholders.This paper selects Shenzhen Magic Design & Decoration Engineering Co.,Ltd(hereinafter referred to as Magic Decoration Co.,Ltd)as the research object.Since in 2017,the major shareholders have implemented the “advocated employees to increase their holdings and the losses to be compensated by the shareholders” for three times.They have issued frequent proposals in a short period of time,which is representative among the companies that have implemented the “advocated‘Rick-Free’” increase in holdings.At present,there are few researches on the“Rick-Free” Shareholding Increasing in academic circles,which can be used for reference by other companies,regulatory departments and market investors.On the basis of the existing literature,this paper first summarizes the market situtation and characteristics of the implementation of the “Rick-Free” Shareholding Increasing.Secondly,introduces “Rick-Free” Shareholding Increasing of Magic Decoration Co.,Ltd,analyzes the motivation of the major shareholders from the aspects of market value management,business performance improvement,control rights and employees,and expounds the completion of the implementation.Then from the four aspects of Magic Decoration Co.,Ltd to implement the effect of “Rick-Free” Shareholding Increasing,select CAR index to measure the market effect of “Rick-Free”Shareholding Increasing,and from the financial performance,non-financial performance and enterprise added value to measure the effect of major shareholders in the implementation of “Rick-Free” Shareholding Increasing.Finally,in view of Magic Decoration Co.,Ltd in the implementation of the “Rick-Free” Shareholding Increasing of the deficiency,put forward targeted suggestions and elaborate from the case analysis of the enlightenment.Through the research findings: first,the implementation of “Rick-Free”Shareholding Increasing can bring short-term market effect,play a role in stabilizing and boosting the share price,but it is difficult to stimulate the long-term share price,the long-term trend of the company’s share price still depends on the support of the company’s fundamentals;Second,when Li Suhua,the major shareholder,implements the “Rick-Free” Shareholding Increasing,there may be a hollowing behavior to ease the risk of control transfer and then encroach on the interests of minority shareholders.At the same time,it also stabilizes the stock price of the company and increases investment confidence,raising funds,improving performance and retaining and motivating employees to optimize corporate governance support behavior;Third,the employees who responded to the increase had short-term speculation,and investors in the external market were easily misled.Finally,according to the above conclusions,this paper puts forward some suggestions and inspirations to provide certain reference and reference for the companies,regulatory authorities and investors.