Motivations Behind Companies' Riding the Wave on Interactive Platforms: From the Perspective of Insider Share Reductions

ABSTRACT This study focuses on the ‘riding the wave’ behaviour of A‐share listed companies on interactive platforms, examining the motivations behind this behaviour from the perspective of insider share reductions. The findings indicate that the ‘riding the wave’ behaviour of companies significantly facilitates insider share reductions, confirming the motivation of companies to strategically disclose information on these platforms to facilitate share reductions. Mechanism analysis demonstrates that this ‘riding the wave’ leads to heightened investor sentiment and herding behaviour, ultimately enabling insider share reductions. Further research finds that when a company has stronger self‐serving motives, more internal reduction opportunities, and lower reduction costs, this effect becomes more pronounced. Additionally, we also find that companies mainly adopt a catering strategy, and that the effect of ‘riding the wave’ on insider share reductions is temporary and primarily driven by exaggerated disclosures. This paper sheds light on management's strategic information disclosure behaviour and its motivations within interactive communication settings, providing a scientific basis for regulators to enhance the regulatory framework for this novel disclosure channels.