The Signaling Effect of Listed Companies’ Executives’ Shares Reduction —Empirical Evidence from Securities Lending Transactions in Chinese A-Share Market

Abstract

Stock price was affected by listed company announcements, as well as other non-systemic factors. Directors, supervisors and managers are company insiders. Will their shares reduction announcements send negative signals to the stock market? This article explores the signaling effect of shares reduction through empirical study, and found that for those companies in sales growth, sales reduction announcements from executives had a rather significant role in signaling. This article will extend the range of signaling theory in some degree, and help regulators gain a better understanding of how the investors make their investment decisions in the market.