A Study On The Factors Influencing The Market Effect Of China’s A-Share Market Splitting Announcement

As a means of capital operation,spin off and listing can enable parent and subsidiary companies to achieve business focus and reduce negative synergies.It is widely used in capital markets in Europe and the United States.However,in our country,the asset restructuring method of spin off and listing rarely appears.The reason is that China’s capital market has not established a strong and effective capital market operation mechanism due to its short development history,and the relevant rules and regulations are not perfect,so the CSRC has strict restrictions on the split listing.In 2004,the CSRC issued a notice allowing A-share companies to split their subsidiaries and list them overseas.In 2010,the CSRC standardized the rules for listed companies to split their subsidiaries overseas and list on the GEM.However,the attitude towards split listing was "not encouraged,not advocated",so split listing has not been widely used for a long time.Until December 2019,China Securities Regulatory Commission issued Several Provisions on the Pilot Domestic Listing of Subsidiaries of Listed Companies to Spin Off,which provided normative guidance for the spin off listing of listed companies in China.As a result,the development of spin off listing in China has entered a blowout period.In January 2022,the Split Rules of Listed Companies(for Trial Implementation)(hereinafter referred to as the Split Rules)will be issued.The Spin Off Rules have clarified the relevant provisions on spin off listing,and further improved the system of China’s capital market on spin off listing by integrating the relevant provisions on domestic and overseas spin offs.According to Wind Financial Terminal statistics,from December 2019 to September2022,there were a total of 119 events where listed companies issued split listing announcements.Foreign scholars have already done a lot of research on spin off listing.However,due to the late start of China’s spin off listing,domestic scholars still need to improve their research on spin off listing.In order to further enrich the research results of domestic spin offs,this paper first combs the relevant theoretical basis of domestic and foreign spin offs.Based on the information asymmetry theory and the management incentive theory,this paper proposes the hypothesis that the equity check and balance ratio and the actual controller attribute are important factors affecting the market effect of the spin off listing.Therefore,this paper takes the listed companies that issued the split listing announcement from December 2019 to September 2022 as a sample,after strict sample screening,uses the event study method to test whether the split listing will produce market effects,and conducts regression analysis on the cumulative excess return,to study whether the equity balance ratio and the actual controller attribute will have a significant impact on the cumulative excess return.The results show that: first,there is a significant positive cumulative abnormal return rate in the event window of the spin off listing,that is,the spin off listing will make the parent company produce a significant positive market effect;Second,there is a negative correlation between the degree of equity checks and balances and the market effect of the spin off listing announcement,that is,the higher the degree of equity checks and balances,the weaker the market effect of the spin off listing announcement;Third,the ultimate controller attribute is negatively related to the market effect of the spin off listing,that is,the market effect of the spin off listing of state-owned companies is weaker than that of non-state-owned companies.This paper puts forward the following policy recommendations: The regulatory authorities should establish a long-term dynamic monitoring mechanism,pay full attention to the changes in the share price of the company before and after the announcement of the split listing,and issue a letter of concern or warning letter to the company in case of any abnormal changes;The regulatory authorities should also timely improve the relevant provisions on spin-off listing to ensure the realization of an effective equity balance mechanism;Listed companies can broaden financing channels and send signals of undervaluation to the market by choosing to split listing,but they should judge the feasibility of split listing and whether it is the best time to split listing according to their own actual situation;State-owned companies should establish effective incentive mechanisms,such as employee stock ownership plans,stock options,etc.In addition,they should deepen the reform of mixed ownership of state-owned enterprises,introduce non-public economy,and stimulate the vitality of state-owned companies;Investors can pay attention to the split listing announcement issued by the listed company,but investors must not invest blindly.When paying attention to the split listing announcement,they should also pay attention to other recent announcements of the company and the opinions of the CSRC on the split listing of the company,and rationally interpret the development prospects of the company based on all kinds of information.