The Announcement Effect of Executive Increasing Shareholdings in Chinese Stock Markets: The Perspectives of Existed Shareholders and Outside Investors

Abstract

The increase in executive shareholdings in listed companies serves as a significant form of insider trading and information disclosure, drawing attention from regulatory authorities and external investors. This paper selects executive shareholding increase events in the Shanghai and Shenzhen A-share markets from 2018 to 2022, and employs the event study method to assess their impact on stock prices based on the perspectives of existed shareholders and outside investors. The findings reveal that stock prices tend to decline before the shareholding increase, followed by a short-term rise afterward, indicating potential information leakage. The investors holding shares during the event may experience losses, while new investors might benefit. Further analysis shows that the impact is more pronounced in the Shenzhen stock market, particularly in 2018.