Research on the Influence of Major Shareholders’ Reduction of Tobacco Related Listed Companies on Enterprise Value: Based on the Intermediate Effect of Financing Constraints

Objectives: Compared with ordinary consumer goods, tobacco and tobacco products have their particularity, which not only plays an important role in the economic development of all countries in the world, but also plays a different role in people’s daily life. In China, the production and sales of tobacco leaves, cigarettes and other tobacco products as well as related tobacco machinery and raw and auxiliary materials have an important impact on fiscal revenue. As the Chinese stock market has basically completed the share-trading reform, stocks that were originally restricted from circulation have begun to circulate. With the continuous increase in the number of lifted bans, the phenomenon of major shareholders reducing their shareholding is also happening constantly. Methods: the paper provides empirical evidence to avoid the adverse effects of major shareholders’ reductions on the promotion of corporate value of listed tobacco Enterprises. From the perspective of the flow of shares after the major shareholders reduce their holdings, with the help of the theory of financing constraints, the article uses an empirical analysis method to explore the effect of the major shareholders of listed tobacco Enterprises on the value of the reduced listed private companies after they reduce their holdings. Results: the results show that when the equity of listed tobacco Enterprises is acquired by state-owned enterprises after the reduction of major shareholders, that is, when state-owned enterprises participate in the shares, the reduction of major shareholders contributes to the increase of the value of tobacco Enterprises. And the larger the reduction proportion of major shareholders, the greater the value of the enterprise. However, when major shareholders reduce their holdings and the equity is acquired by investment institutions and small and medium shareholders, it is not conducive to the improvement of corporate value. Especially when major shareholders maliciously reduce their holdings, it would have an adverse impact on the company’s development and stock price. Conclusion: therefore, from the perspective of enterprise value appreciation, no matter what the purpose is for major shareholders to reduce their holdings, the flow of equity to state-owned enterprises after the reduction is the best choice. The financing constraints of the enterprise could be reduced and it helps enhance the value of the enterprise.