The Impact of Equity Division Reform on Investors

Abstract

For a long time, there are two forms of shares in China's security market, tradable shares and non-tradable shares. The excessive of non-tradable shares has aggravated the market imbalance. In 2005, the State Council approved a pilot reform of listed companies' equity division reform, which is the beginning of the reform. The equity division reform can eliminate some difference of circulation advantage between the two shares in the stock market, so as to make the stock market more internationalized. At the same time, reform can affect the interests of investors and bring benefits to them, so that more people will have confidence in the market and be more willing to participate in the market. In addition, the equity division reform can add more vitality to the listed company, so that the company can form a better operation mechanism and develop prosperously. The reform can also promote the prosperity of the market with a relatively fair mechanism, thus promoting the prosperity and development of the society. This paper will focus on the impact of equity division reform on small and medium-sized investors and institutional investors. By analyzing the benefits and the problems, different situation of investors before and after the reform, the corresponding countermeasures are put forward.