The Study Of Protection Of Minority Shareholders

The study of minority shareholders' protection is meaningful because the protection of minority shareholders is required by the capital market. If the block shareholder is separated from the manager and the corporate governance structure is perfect, the value created by the manager will be shared among all shareholders so that the minority shareholders' rights and interests will be protected. But it is well known that the minority shareholders' rights and interests are exploited in Chinese public listed companies. What is its root?The proxy theory explains the internal factor of why minority shareholders' right and interests are exploited, but it doesn' t explain the external condition.Based on the transaction cost theory,we consider that there are transaction cost in the incompletes contracts between the block shareholder and the manager. So the block shareholder will collude with the manager after he trades off the transaction cost, the private benefit from control, the diversion waste and the value created by the manager. Then the perfect corporate governance structure in which the shareholders are separated from the manager is damaged and the minority shareholders' rights and interests are exploited.So we choose two main facts to study. One is the share liquidity(asset specificity) which will affect the thansaction cost.The other is the diversion waste which will affect the private benefit.The the internal factor tells us that we should improve the role of institutional investors. The theory of liquidity tells us that the state-owned shares affect the liquidity so that the state-owned shares should be reduced. And the diversion waste says that the external restriction can reduce the private benefit and hence we should improve the legal environment, the block shareholder monitoring and the associated dealing regulating.In chapter one, we define the concept of minority shareholder and his rights and interests firstly and then explain the meaning of minority shareholders' protection. Then we analyse the minority shareholders' rights and interests exploited by the block shareholder so as to indicate the practical meaning of our research. Then we summarize related foreign and Chinese literature so as to indicate the theoretical meaning of our research. It includes the main way of how to study the protection of the minority shareholders,the key of the minority shareholders' protection and the general explanation of the internal factor of why the minority shareholders' rights and interests will be exploited. Finally we discuss the methodology of our research, the chapter arrangement and the innovation in this dissertation.In chapter two, we explains the internal factor and external condition of minority shareholders' rights and interests being exploited by the block shareholder based on the contractual theory . Especially, we analyse the external condition based on the transaction cost theory.In chapter three, we discuss the share liquidity (asset specificity) which affects the transaction cost.We study the shareholders structure in Chinese public listed companies, the cause of formation, the abuse, the comparison with other countries and the relation between the controlling power and the shareholders structure,so as to find policies.In chapter four we discuss the cost of the private benefit from control by model when the block shareholder colludes with the manager.The model shows that the external restriction will reduce the private benefit.In chapter five, we discuss the empirical analysis of the effect of the block shareholder change using the data from 1999 to 2002. The results show that the external restriction will reduce the private benefit.In chapter six, we discuss five policies according to the fact of currentChinese public listed companies: improving the role of institutionalinvestors, reducing state-owned shares, improving the legal environment,improving the block shareholder monitoring and improving the associateddealing regulating.The seventh chapter is the conclusi...