Market Reaction to Consideration in Nontradable Share Reform

By using the method of event study, it analyzes market reaction of listed companies in nontradable share reform as well as regards all consideration as five types: bonus share, cut share, warrants and assets reorganization. It compares the distribution of CAR(communicative abnormal return) of various listed companies in order to probe into effectiveness and causes of consideration. It can be concluded that: firstly, the market reaction to share reform incident are statistically significant; secondly, the market reaction of listed companies with various consideration programs are obviously different; lastly, the market reaction of listed companies with bonus share and assets reorganization are better than those with cut share and warrants.