Advances in International Finance. 2020; 2: (2) ; 10.12208/j.aif.20200003 .
One important aspect of the financial supply side reformis to perfect the supply of financial system products. Only through the construction and improvement of financial market system can finance become an important promoter of China’s core competitiveness. By studying the market influence of the financial system, it can provide inspiration for the financial supply side reform.The paper adopts an event study method and applies panel quantile regression analysis to investigate the impact of stock reduction pre-announcements on the stock market in the A-share market of China. It verifies the information revealing function of margin trading system under the impact of market.Overall, the results show a significant influence of such announcements on the performance of the stock market. The paper argues that in general the implementation of the stock reduction pre-announcement scheme is well-regulated, there is no evidence of information leakage before the announcement. The analysis discovers only a short-term influence of those announcements on abnormal rate of returns and price fluctuation of stocks, while not much information is found for further expectations. The paper also finds that the margin trading system can ease the negative shock of stock reduction pre-announcement on the market, this accords with the expected outcomes of the margin trading system when it was first designed. Institutional investors have little response to pre-announcement, and the relevant variables are not significant, which indicates that institutional investors ignore the short-term volatility of the market caused by the reduction of pre-announcement.