Research On The Influence Of The Major Shareholder Power On The Quality Of Internal Control Information Disclosure

With the vigorous development of the capital market,China’s economic situation is steadily improving.However,as the market continues to open up,many issues such as the poor quality of internal control information disclosure have gradually emerged The severity of the centralization of major shareholders has brought about a series of problems such as defects in the governance structure.Issues such as the manipulation of internal control information disclosure by major shareholders and lowering the quality of internal control information disclosure have frequently appeared.This seriously infringes on the interests of creditors,investors,and minority shareholders.This undermines the confidence of various investors,and hinders the steady growth of the market economy.On January 15,2019,*ST Kangde announced a warning about the risk that the matured bonds redeemed as scheduled.10 days later,*ST Kangde announced a material breach of contract.As a private enterprise of developing high-tech materials,its monetary fund showed the sufficient balance on the book.However,the company was unable to repay the high maturity bonds.The company’s move caused a huge response in the bond market.Unrestricted power of major shareholders is the main reason for such problems.Therefore,it is worth considering and discussing how to effectively restrict the major shareholder power.In order to improve the quality of the internal control information disclosure and to protect the interests of minority shareholders,it is also significant to optimize the internal control information disclosure mechanism.This article analyses the influence of the largest shareholders on the quality of disclosure of internal control information,using*ST Kangde as an example.The article draws lessons from the shortcomings in the quality of disclosure of internal control information.The paper aims to limit the major shareholder power and put forward effective measures to improve the quality of internal control information disclosure.First of all,this part lays the theoretical foundation.In this part,the paper sorts out the literature related to the power of major shareholders at home and abroad,and describes the related concepts and basic theories.Secondly,this part sorts out the timeline of the case,the deficiencies of internal control information disclosure,the Shenzhen Stock Exchange’s rank of the company’s information disclosure,and the punishment results of the case.Thirdly,this part analyzes the motivation and the influence path how Kangde Group which is the largest shareholder of*ST Kangde manipulates internal control information disclosure.This part selects certain indicators from the four dimensions of the composition of the maj or shareholder power to analyze the influence of the maj or shareholder power on the quality of internal control information disclosure.A corresponding logical framework will be formed based on the previous relevant analysis.Finally,on the basis of the previous research,the last part draws conclusions and makes suggestions to protect the interests of minority shareholders.This paper finds that the major shareholder uses the power to manipulate the internal control information disclosure.The maj or shareholder has the power to obstruct the flow of information to conceal unfavorable news.It damages the rights and interests of minority shareholders,and endangers the stability of the capital market.With a high degree of ownership concentration,the major shareholder has power to decide on the nomination and appointment of directors and supervisors.The decisions on internal control information disclosure will inevitably aim to safeguard the interests of the major shareholder.