Econometric Analysis of Share Structure Reform

Prior to April 29 2005, only one third of the shares issued by exchange-listed companies in China are publicly tradable. Focusing upon split share structure, China Securities Regulations Commission issues a reform project which aims to convert all non-tradable shares to be publicly tradable. Although no model finds system-wide effects, the panel data results identify the dual effects on the Stock Market: on the one hand, it enhances the investor’s confidence, the amount increases; on the other hand, it increases the investor’s discontent about consideration, the price decreases. Through introducing the policy dummy variable in the econometric model, which it explains the problem.