The Influence of Large Shareholders' Reduction on Firm Value

This paper investigates the influence of large shareholders' reduction on firm value for China's listed companies. We find that, the effect of large shareholders' reduction on firm value is related with reducing degree, which has an inverted U curve relation in the higher reducing degree group. Ownership restriction has a positive relationship with firm value. The effect of the first large shareholder's reduction on firm value is positive, but not significant; the second large shareholders reduction's behavior has a significant negative influence on firm value. We also find that, corporate size has a significant negative influence on firm value, debit-assets ratio and earnings per share have significant positive influence on firm value. It's suggested that they take measures to promote the second large shareholder to take part in the operating business of listed companies so as to decrease their will of reducing holdings, which is helpful to improve ownership restriction.