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Management Trading in Chinese Entrepreneurial Firms on the ChiNext

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  • May Hu
  • Xiao Jun
  • Jingjing Yang

Abstract

We examine management trading in Chinese entrepreneurial firms on the ChiNext. We find that management shareholdings are considerably high, and executives tend to sell their shares after the IPOs on the ChiNext. The propensity for executives to sell shares is negatively correlated with the firms’ corporate governance and current operating cash flows, but the amount they sell is only positively correlated with the level of management holdings. Both the management selling decision and percentage of selling do not associate with firms’ earnings and sales growth. This suggests that managers are profit makers rather than informed traders in their selling activities on the ChiNext. We also find that the market reaction to management selling is substantially negative, which implies a herding effect of investors following executives to sell shares.

Suggested Citation

  • May Hu & Xiao Jun & Jingjing Yang, 2015. "Management Trading in Chinese Entrepreneurial Firms on the ChiNext," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(S5), pages 33-45, September.
    • Handle: RePEc:mes:emfitr:v:51:y:2015:i:s5:p:s33-s45
    DOI: 10.1080/1540496X.2015.1026739
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    Cited by:

    1. Yang, Baohua & Zhou, Yingluo & Zhou, Zhong-Guo, 2022. "Strategic behavior of insiders in initial underpricing and long-run underperformance," Emerging Markets Review, Elsevier, vol. 53(C).
    2. Hu, May & Tuilautala, Mataiasi & Yang, Jingjing & Zhong, Qian, 2022. "Asymmetric information and inside management trading in the Chinese market," The North American Journal of Economics and Finance, Elsevier, vol. 62(C).

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