Ban on sale of shares of major shareholders: the nature and financial characteristics of equity

[Abstract] controlling shareholders of listed companies, investors, government and agency costs between the double major shareholders decided to ban sale of equity shares of behavior and the nature and characteristics of relevant corporate finance. Empirical studies tend to find that controlling shareholders with holdings of less than the intensity of non- controlling shareholder, state-controlled holdings of major shareholders is lower than non-state orientation and intensity of the controlling shareholders, holdings of assets and liabilities showed a higher rate, asset management is better, but earnings per share is low, companies and other financial characteristics of small-scale . Moreover, the state holding the controlling shareholder and non-state reduction is not the same motivation, balance high and low monetary fund holdings led to the reduction of state-owned controlling shareholder of the main factors leading to poor profitability of large non-state-controlled shareholders holdings of the main factors. debt ratio higher and lower earnings per share reduction behavior of the controlling shareholders have a significant impact on operating profit margin is low and small-scale acts of non-controlling shareholders have a significant reduction of impact is usually in the company's major shareholders overvalued when the reduction of profit, there was a significant reduction of the time behavior tend to favor.

[Keywords:] shares of major shareholders to sell ban, the nature of equity, control of the financial characteristics

First, the issues and background

Studying the behavior of shareholders intended to maintain the capital markets, the interests of fairness and protection of small investors in recent years and foreign scholars on the major shareholders concerned about the behavior of the hot issues are mainly two aspects: First, large shareholders to pursue private benefits of control and occupation interests of the listed companies, the study found a large shareholder against the interests of small shareholders of listed companies conduct emptied (Tunneling exist in all countries [1-4], but not always emptied major shareholders of listed companies, in order to obtain control of the long-term income, major shareholders of listed companies sometimes have to transfer resources to support behavior (Propping [5-6]. that our scholars, our major shareholders of listed companies only exist hollowed out the same behavior exists to support the behavior [7-9] for hollowed out and support shareholder actions to the source and reason, most of the literature from the legal system, environmental and corporate governance characteristics of study factors affecting the behavior of large shareholders. Hou Xiaohong, Li Qi, Luo Wei (2008 that the company's financial characteristics of the behavior of a significant shareholder the impact of China's listed companies for the study, hollowed out and support the major shareholder behavior and profitability of listed companies related to [10]. Second, the majority shareholder to sell the shares on the motives and economic consequences. Bolton and Thadden (1998 pointed out that when the stock increase market liquidity and makes the bulk of transactions and mergers likely to occur, relying on control of most of the equity method to maintain control of the company is no longer valid, major shareholders tend to be more dispersed ownership allows the company to sell shares of [11]. Clarke et al (2004 study found that large shareholders have the ability to sell the shares through the selected time to profit when the company is overvalued, the major shareholders to sell shares [12]. Keim and Madhavan (1996 study found that small companies major shareholders to sell a large block of shares of the cost [13]. Fahlenbrach and Stulz (2009 对 between 1988-2003 U.S. holdings of listed company managers study also found that when the good performance of the company when managers tend to sell shares [14].

The particularity of China's capital market behavior led to major shareholders present a more complex features. Tradable share reform before the non-tradable shareholders can not achieve the shares through the stock market gains, only through other means to grab control over the occupation of private income the interests of investors and listed companies [15-16]. tradable share reform to promote innovation in China's capital market, but the size of non-lifting of the ban also provides for non-tradable shares ways to cash in profits, Liu Yali and Li Jingjing (2010 study found, lifting shares of the controlling shareholder of the sale of non-controlling shareholders than a higher premium on equity transfer [17].

Based on non-tradable shareholders equity and cash price to obtain the original logic of reasoning and the profit motive, "the size of non-" the harsh reality of the reduction of the stock market crash, theorists and practitioners remain the main focus of attention in the behavior of market holdings of major shareholders response, the general conclusion that the size of the holdings of major shareholders of non-lifting of the ban and behavior over time, the impact on the reduction of company stock have different levels of expression, there are some significant stock price fluctuations [18-19], the rights of holders of tradable shares not guaranteed, but the "size of the non-" shortly after the lifting of the ban and no major shareholders to sell shares [20]. regulators, mainly from the reduction of norms of non-tradable shares trading behavior of market measures, the Commission has issued a mandatory disclosure mechanism, the bulk of trading mechanism, secondary offering and other specifications to reduce the "size of the non-" reduction of the impact to the market, but the effect is not significant.

Non-reduction of the size of the current research and policy norms of the existence of a major flaw is the focus on the consequences of the test, ignoring the analysis of the causes, failed to lift the ban on large shareholders to sell shares of the motives and factors affecting the in-depth analysis based on rational investors hypothesis, taking into account the long-term shareholder return on investment and private benefits of control problems, the reduction behavior is selective, Fahlenbrach and Stulz (2007 analysis that the major shareholders to sell shares of the listed company's financial behavior and characteristics related to [14 ]. Our data also show that not all of the major shareholder in the size of the reduction of non-lifting of the ban after they choose, with no reduction of holdings of the company's financial characteristics of the difference is a matter of concern. In addition, China's national conditions determine the state-controlled large shareholders subject to political and other factors associated with the impact of their behavior and reduction of non-existence of state-owned controlling shareholder should be different. There is no systematic study of scholars in-depth nature of major shareholders and the financial characteristics of the major shareholders to sell shares of the impact of lifting the ban, this paper to conduct research for the development of large shareholders on the reduction behavior of policy specification to provide data to support.


Second, the theoretical foundation and research design

(A theoretical foundation and hypotheses
1 large shareholders to sell shares and the equity nature of the ban
Although the size of the holdings of major shareholders of non-lifting of the ban and is a unique phenomenon in China's capital market, but the shareholders to sell shares held by domestic and foreign scholars, the phenomenon has been a topic of concern for large shareholders to sell shares in real terms is between large shareholders and small shareholders, agents manifestation of conflict is generally believed that large shareholders to sell shares in the company to attract external funding to promote faster development and spread a large shareholder to reduce the risk of the portfolio, but Shleifer and Vishny (1997 pointed out that when a large proportion of shareholders holding less than optimal the proportion of shares will result in agency costs, thereby reducing the value of the company. sale of shares also makes major shareholders of the company's control, and reduced ability to resist external takeover, the company acquired the possibility to increase, making the control of the market for large shareholders pressure [21], and, once lost control of the company, the controlling shareholder will not be able to continue to enjoy the private benefits of control. Dahya, et al (2008 view, from the ownership structure of the endogenous perspective, controlling shareholders to decide the ownership structure, controlling shareholders to pursue their own interests to maximize the natural choice is to reduce the level of investment in the company and diversify risk, but can also lower the cost to capture private benefits of control [22], so for large shareholders to sell shares of the study should also concerned about the changes in the level of control, the controlling shareholder and non-controlling shareholders in the sale lifted shares of differences on the motivation of Chinese listed companies in highly concentrated ownership structure and common controlling ownership share of large shareholders, especially in state-owned holding company in [23-24]. Deng Jianping and Zeng Y (2004) [25], Hsu (2009 [26] and other empirical studies have found that our controlling shareholder's private benefits of control than in developed countries. tradable background, controlling shareholders and the investment return based on long-term private benefits of control considerations, motivated by the reduction of equity holdings to profit, but usually will not easily give up control, so the reduction would be more cautious behavior, while the current supervision mechanism is not in our sound cases, non-controlling shareholders to participate in company decision-making greatly limited the extent of its holdings of cash profit motive is stronger.

In the principal-agent problem of listed companies, in addition to controlling shareholders and conflicts of interest between investors, but also there is the government (officials in the interests of the company occupied the possibility that the controlling shareholders of listed companies, the government (officials and investors, there is a double agent between cost (Twin Agency Problems. state-owned holding company, listed companies in China accounted for a large proportion, this data shows the size of our non-ban state-owned holding company to 60%. Djankov et al (2004 that the government (officials will use the powers at their disposal to reap benefits, such behavior will affect the controlling shareholders, small investors and the interests of listed companies, the government's encroachment on the interests of listed companies and corporate nature of the closely related [27] In China, the state-owned listed companies, controlling shareholders are all levels of the SAC. SASAC as an ad hoc government agency, is the controlling shareholder of state-owned enterprises and listed companies to grasp the actual control of the [28] state-owned controlling shareholders of listed companies held by the separation of ownership and control is not high , and because of the identity with the government, with its controlling shareholder has the executive power to more effectively against other government agencies (officials of the interests of the company's act of usurpation [29-30] Therefore, compared to non-state-owned listed companies, state-owned listed companies in the second layer of agency costs lower, lifting shares of major shareholders to sell even more incentive to weak [31] On the other hand, Kornai (1980 proposed the concept of soft budget constraint that the socialist government for the economy " fatherly motives "would be state-controlled enterprises pay more attention to and support the Government and state-owned enterprises," father-son relationship, "the state-owned enterprises easier access to government assistance to alleviate the major shareholders of non-tradable shares in the rapid reduction of motivation after the lift At the same time, the government and state-owned enterprises, "father and son relationship" also makes the state-owned enterprises to take the government's multiple objectives, such as economic development strategy, employment, social pension, social stability, etc., the resulting burden on the state-owned enterprise policy in large reduction of shareholders a tremendous impact on the capital market situation, the state-owned holding company shareholder will bear more responsibility to maintain market stability, regulatory pressures and policy guidance based on its holdings of more cautious behavior. Accordingly assumptions:
H1: Equity shareholders of the nature of a significant reduction of impact behavior, controlling shareholders and the intensity reduction tendency than non-controlling shareholders, the state-owned holding company and major shareholders of the tendency of reduction of the intensity is lower than non-state-owned holding company's largest shareholder.

In this paper, whether the reduction of major shareholders (RED and reduction ratio (RP) used to measure the behavior and reduction of holdings of major shareholders increases, and select whether it is state-controlled (SS to determine the nature of the major shareholders equity holdings behavior. both the largest shareholder as the controlling shareholder, to the second largest shareholder representatives as a non-controlling shareholders, the largest shareholder is the reduction of choice (FR and the second largest shareholder is the reduction (SR to examine the degree of shareholder control reduction behavior.

2 big shareholders holdings and financial characteristics
Large shareholders on corporate behavior and financial characteristics of the study focused on shareholder interests to seize control of the area. Jensen (1986's "free cash flow hypothesis" that the company had cash and liquid assets, the greater the number, the controlling shareholder more resources can be used to control the right to pursue self-interest [32]. Dai Lu, Tang Guliang (2007) study pointed out that some of China's listed companies reflect the financial characteristics of short-term borrowings / total assets and currency capital / total assets, the two indicators long-term "double high", the real is a listed company with long-term debt refinancing to maintain the low efficiency of investment and expansion and

Links to free download http://www.hi138.com meet the interests of major shareholders of the private, high cash holdings do not represent the true solvency of the company, in essence, controlling shareholders gain control of the performance [33]. Hou Xiaohong, Li Qi, Luo Wei (2008 also believes that the company's financial characteristics of the behavior of large shareholders have a significant impact on the size of the current non-reduction and financial characteristics of the relationship between the very rare [10] adverse selection theory suggests that large shareholders who shares of a company can expect the company to outside investors the good performance of the signal. This paper argues that major shareholders of the company's financial holdings have a deep background for the good of the company's financial indicators, a large reduction of shareholders will be more cautious, poor financial situation holdings of major shareholders the company will be more intense, and, as the preceding analysis, equity and control over the nature of the different nature lead to major shareholders in the enterprise management level there are differences, there is also the major shareholder profits approach differences, based on their own interests, controlling shareholder and non-controlling shareholders, the state-owned holding company's largest shareholder and non-state-owned holding company's major shareholders concerned about the financial indicators are not the same, different nature of the company's equity and its financial characteristics of the relationship between holdings of major shareholders or a test questions to be proposed in this paper assume that:
H2: holdings and holdings of the company's financial characteristics are not significantly different, being the major shareholder equity holdings of the different nature of the company's financial characteristics significantly different.

This article focuses analysis on the major shareholders of the company's financial characteristics of the reduction factor based on the classic paradigm of financial analysis, were selected to reflect the company's capital structure, liquidity, profitability, asset management of financial indicators, system tests and did not reduce holdings of holding company's financial characteristics of the differences Select asset-liability ratio evaluation of the company's capital structure, choose the current ratio evaluation of the company liquidity, and to learn from Dai Lu, Tang Guliang (2007 approach [33], choose short-term borrowings / total assets and currency capital / total assets two variables to examine the currency holdings of large shareholders, the financial impact profitability, the company's performance measurement usually include market performance (such as Tobin's Q value, etc.) index and the book of financial performance indicators. Lee-Ping Hsu, et al (2006 studies suggest that China's stock market price discovery is very limited, the effectiveness of the stock market and the mature Western markets with a large gap, making the use of Tobin's Q value is not a prerequisite for fully equipped, relatively speaking, the use of indicators is more suited to assessing the accounting class the performance of listed companies in China [34]. In this paper, the operating margin and return on equity to measure the profitability of the company, and by using indicators to evaluate the earnings per share diluted share operating performance of listed companies. Choose evaluate the company's turnover Asset management level.

In the control variables in, Keim and Madhavan (1996 study found that company size to large shareholders to sell large shares have a significant effect, so the size of the company into the control variable [13] In addition, Clarke et al (2004 that the largest shareholder has the capacity to choose to sell stake opportunity to profit, the study found when the company is overvalued, the major shareholders to sell shares [12]. Ba, Zhuyuan Qian, Zheng Hong (2008 that circulation in the context of capital market valuation of central tendency show down , Tobin's Q value of financial assets and physical assets of the investment operations strategy played a crucial role in guiding, as long as the ban of non-tradable shares held by shareholders of its higher Tobin's Q value, which the shareholders have an investment in kind to assets, their behavior is often more significant reduction [35], so choose the value of Tobin's Q as control variables. In this paper, the following two models to test the above hypothesis, among which Model 1 is the reduction of major shareholders factors affecting the analysis of Model 2 for large shareholders, the impact of rate reduction factors were analyzed.

Model 1: RED = @ + β1 × SS + β2 × DEBT + β3 × CR + β4 × DZ + β5 × HZ + β6 × OPR + β7 × ROE + β8 × EPS + β9 × ATR + β10 × SIZE + β11 × TB + ΣIndustry + ΣYear + ε
Model 2: RP = α + β1 × SS + β2 × ER + β3 × SR + β4 × DEBT + β5 × CR + β6 × DZ + β7 × HZ + β8 × OPR + β9 × ROE + β10 × EPS + β11 × ATR + β12 × SIZE + β13 × TB + ΣIndustry + ΣYear + ε
The full sample regression results, the equity nature of the (SS regression coefficient is significantly negative, indicating that fewer state-owned holding company, holdings of a major shareholder behavior, assuming that 1 is verified. Earnings per share (EPS in each group in the regression coefficients are significantly negative, compared to operating margin (OPR and return on equity (ROE regression results in each group, the reduction of the impact of major shareholders is more significant, indicates that large shareholders are more concerned about the company's shareholding diluted by profitability. reduction of turnover and shareholder behavior in all groups were significant positive correlation. indicate a higher level of holdings of asset management in addition to control variables firm size (SIZE of the regression coefficients are significantly negative, indicating the occurrence of the smaller companies holdings of major shareholders act more. Tobin's Q value (TB regression coefficients in each group are positive, but not significant.

The return from the sub-sample results, the state-owned holding companies, asset-liability ratio (DEBT regression coefficient is significantly positive, monetary funds / total assets (HZ) of the regression coefficient is significantly negative, and the impact of greater value (coefficient of the large, indicating high financial leverage, lower currency holdings led to the reduction of state-owned holding company, one of the reasons the major shareholder in the non-state-owned holding companies in asset-liability ratio (DEBT regression coefficient is negative but not significant, business profit margins and earnings per share in the non-state-owned holding company in the regression coefficient is significantly negative, indicating the poor profitability of non-state-owned holding company, one of the main holdings of major shareholders, which also proved a distinction between state-controlled holding companies and non-state analysis holdings of major shareholders is necessary to conduct the above findings show that the holdings of major shareholders and corporate behavior is indeed related to the nature and financial characteristics. a higher debt ratio, lower currency holdings, asset management is better, but low income per share , the smaller is the reduction of the company's key financial characteristics, which support the hypothesis 2 with Table 2 and Table 4, test results, we found that not all financial indicators are not in the holdings and holdings of state-owned holding company and non-state holding companies in both the presence and influence of significant differences, indicating the different nature of shareholder influence their decision-making leading to their concerns only part of the financial indicators.

In order to investigate the nature of equity, holdings of major shareholders of financial characteristics and magnitude of the relationship between our companies to further the reduction of the sample, using model 2 investigated the nature of equity and financial characteristics of the magnitude of the impact of the reduction of major shareholders due to the reduction of the dependent variable proportion (RP is a continuous variable, using OLS regression. variables the Pearson correlation test (for lack of space between the table a little show that since the variable does not exist between the problem of multicollinearity in Table 5, all regression models showed that the Durbin- Watson test values ​​are around 2, indicating that the model there is no significant problem of autocorrelation sequence. F statistic indicates that all regression models at the 1% significance level, indicating that the overall model fit better. Adjusted R2 from 0.266 ~ 0.434, provided the explanatory power of these regression models. The first (column 1 is not the full sample excluding outliers of the regression results, (2 outliers removed after the column is the full sample regression results, we found , 5 outliers greater impact on the regression results, after excluding outliers, the model fit is significantly improved, adjusted R2 increased from 0.325 to 0.434, taking into account the robustness of regression results, in the back of the group return excluded five outliers.

The full sample regression results show that the nature of equity (SS regression coefficients were significantly negative, indicating that state-owned holding company's largest shareholder behavior has less, and, if the largest shareholder holdings (FR and the second largest shareholder is less support (SR regression coefficient in all samples were significantly positive, and the values ​​are greater than the impact of SR FR, that first, the second largest shareholder of the tendency of a significant reduction, and reduction of the second-largest shareholder of magnitude than the first largest shareholder even more significant. shows the degree of control over the holdings of major shareholders behaviors, assuming that 1 is verified. asset-liability ratio, asset turnover and earnings per share holdings of major shareholders by the percentage of regression coefficients are significant test, sign consistent with the previous text with the foregoing difference is the size of the company's major shareholder of the magnitude of the reduction is not significant, and Tobin's Q value (TB of the regression coefficients in each group is significantly positive, that is, reduction of amplitude of the major shareholders significant effect, indicating the existence of large shareholders, a significant reduction of behavior tend to favor the time, usually when the company overestimated the value of holdings, with the literature [12,35] the same conclusion. Links to free download http://www. hi138.com sub-sample regression results show that the state-owned holding company, DEBT, CR regression coefficient is significantly positive, HZ regression coefficient is significantly negative, and the impact of large values, indicating that although the state-owned holding company, asset-liability ratio less than non-state-owned holding company, but the shareholders still hate high financial leverage, high debt and low currency holdings led to the reduction of state-owned holding company, the main shareholder in the non-state-owned holding company, operating margin and earnings per share EPS OPR The regression coefficient is significantly negative, and the impact of large values, indicating the poor profitability of non-state-owned holding company that affect the reduction rate of the main shareholder state-owned holding company with holdings holdings of non-state-owned holding company's financial characteristics were significantly different. grouped according to the nature of the return of control over the display, the reduction was the largest shareholder of the company, DEBT regression coefficient is significantly positive, EPS of the regression coefficient is significantly negative, OPR's regression coefficient is negative but not significant, indicating that the first more concerned about a large reduction of shareholders equity diluted by the company's profitability, high debt and low profitability of the holdings of major shareholders led to the first main factor was the reduction of the second-largest shareholder of the company, DZ, OPR, SIZE The regression coefficient is significantly negative, OPR maximum value of impact, indicating the second largest shareholder loan financing for short-term behavior is not offensive, and low operating margins and result in smaller second-largest shareholder is the main factor reduction, assuming 2 be verified. In addition, we also found that, ROE regression results in each group were not significant, Xiaoyue (2001 [36] and Chen Hsin-yuan (2004 [37] studies suggest that long-term return on equity of listed companies as regulators issuance, allotment and assessment of core indicators, the possibility of earnings management to be very large. paper to support their point of view.

Fourth, further testing and robustness testing
Xia Lijun, Fang Yiqiang (2005 argues that, even state-owned holding company, government-controlled listed companies and listed companies controlled by state-owned enterprises and government relations of its differences, as the Government may be the social burden to the control of listed companies , while the regulatory and legal constraints force difficult to restrict government power, allowing the government to its control of listed companies have a stronger against [30] Taking into account the differences in ultimate control of the holdings of large shareholders, the potential impact of this state-owned holding company according to the nature of the ultimate shareholder is divided into control and non-SAC SAC control groups, showed that the control of a major shareholder in the SAC reduction ratio (mean 6.27%, slightly lower than the non-SAC-controlled company (mean 6. 83%, but the difference was not statistically significant between the two groups of financial indicators in addition to the scale of the company are not significantly different, indicating that the ultimate in state-owned holding company in control of the nature of the holdings of large shareholders and corporate financial behavior features not significant.

We will also be the largest shareholder of the company a total of 249 holdings, according to the largest shareholder with control over the median into high and low concentration groups, respectively, examined the financial characteristics and by major shareholders holding differences, the results show a high degree of concentration of control over the company's largest shareholder reduction ratio (mean 8.36%, slightly higher than the lower concentration of control of the company (mean 7.57%), two groups slightly different values ​​of financial indicators, but not significant, that the concentration of control over the holdings of major shareholders is not significant, which is lifted and the reduction of the company, only 19 occurred at the first transfer of control of major shareholders the same survey shows that controlling shareholders tend to retain control over the premise of care through the reduction of profit, but the controlling shareholder and non-controlling shareholders concerned about the financial indicators are not consistent. is the controlling shareholder of the company's holdings and holdings of non-controlling shareholders The company's financial characteristics were significantly different.

In addition, to test the robustness of the conclusions, the sensitivity of this test were as follows: First, by reduction of the proportion of all the holdings of the median (5.00% reduction of more groups into smaller groups and reduction , and two independent sub-samples were tested, we found that regression results are similar, but the significance level of variables is different in the reduction of more group level variables significantly higher in the underweight group was significantly lower level and the regression coefficient estimate has declined. Second, select a variable other financial characteristics, we introduced the quick ratio, operating margin and net profit growth, and found their impact on the results not significant in the main conclusions of the sensitivity of the test under essentially the same. five, the conclusions
This paper examines the size of the holdings of major shareholders of non-lifting of the ban after the nature and behavior and the equity relationship between the company's financial characteristics. The results show that the nature of equity and financial characteristics of the holdings of major shareholders have a significant effect, controlling shareholders and the intensity reduction tendency than non-controlling shareholder, state-controlled holdings of major shareholders is lower than non-state orientation and intensity of the controlling shareholders, assets and liabilities higher, better asset management, but lower earnings per share, the company is smaller reduction of the company's key financial characteristics by large holdings of state-owned holding company shareholders and non-state-owned holding company's financial characteristics are significantly different. Although the reduction of state-owned holding company debt ratio is low, but the shareholders still hate high financial leverage, high debt and low amount of monetary funds is held by major shareholders led to the reduction of state-owned holding company, a major factor. non-state-owned holding company, asset-liability ratio higher, but the reduction of financial leverage on the major shareholders did not affect behavior significantly, leading to low profitability of non-state-owned holding companies and large holdings of the main shareholder. Debt ratio higher and lower earnings per share reduction behavior of the largest shareholder has a significant influence, operating profit margin is low and small-scale behavior of the second largest shareholder with a significant reduction of impact study also found that the value of the company's largest shareholder is usually overvalued holdings, there was a significant reduction of the time behavior tend to favor.

Controlling shareholders of listed companies, investors, government and agency costs between the double major shareholders decided to ban sale of equity shares of behavior and the nature and characteristics of relevant corporate finance. The current major shareholders of listed companies sell shares lifted the rate is not significant, indicating After completion of the share reform holdings of major shareholders would not be a short-term behavior, but a long process, the gradual reduction of major shareholders tend to achieve profitable long time, the major shareholder of the different nature of the concern is not the same financial characteristics. For shareholder norms of behavior are not confined to market transactions, the regulatory system of innovation is particularly important, the current behavior of the holdings of major shareholders of the accounting regulatory system has lagged far behind. a profound analysis of major shareholders and the factors affecting the reduction of motivation to study the reduction of The company's main financial characteristics, institutional innovation is a prerequisite for this paper's findings for the development of norms and behavior of companies in the market to guide the policy has a certain reference value. Links to free download http://www.hi138. com