| Collusion is a widespread phenomenon in all of organizations and constitutions, it would cause serious distortions of industrial policy and governmental regulation. The concept of collusion studied in this paper is defined as a co-behavior of the large shareholders and the manager, which holding back the residue of the enterprise and encroaching upon the interests of small shareholders, to maximize their own benefit. Form 1980's, mass of collusion events occurred in the economic marketing of the whole world. Nowadays, it is urgent to be studied because the collusion becomes a outstanding problem in corporate governance increasingly. However, this phenomenon be ignored in modern firm's theories (MFT). The reason is, MFT studying agent problem is based on the aspect of the interest conflict between owner and manager as well as how to design a optimal incentive mechanism for controlling agent risk by principal, but they neglect another aspect of the interest conflict between large shareholders and small shareholders. Therefore these theories couldn't explain the problem of the collusion. It is necessary to change to another angel of view, the interest conflict among large shareholders, small shareholders and manager, for solving the new problem in the process of corporate governance. Firstly, this paper gives a general analysis for forming mechanism of the collusion. According to the theory of principal-agent, the shareholder should supervise the behavior of the manager in order to reduce the moral risk came from the asymmetry of information. Because of unable to share the cost of supervision and because of the "free ride" motivation of small shareholders, the supervision is actually executed by large shareholder. Because the interest of large shareholders is different form that of minority, and because the supervision is external, large shareholders maybe not do best on their duty. The motivation of supervision fading out even disappearing, leads large shareholders deviating from the purpose of maximizing the benefit of the whole shareholders or maximizing the efficiency of the enterprise, turning to realize the maximum individual benefit based on the existing organization. The collusion with managers becomes inevitable. It is because that the reality of obtaining individual benefit gives them motivation, the rights of control and asymmetry of information provide them the conditions. In the case of the corporate governance in inefficiency, the large shareholders and managers would choose the collusion droved by their self-regard.Subsequently, this paper analyzes the implementation mechanism, methods and economic results of the collusion based on the Chinese listed companies. In the listed companies, the state share is dominative without circulating, corporate governance is substandard, the manager appointed is administrative without validity of supervision and incentive, the relative information published is incomplete and the law for protecting small shareholders is lacking. These basic reasons that came from the system of administration make the collusion possible. In practice, various methods of the collusion are used in the listed companies, which including: profit controlling, association transferring, substandard policy of interest distribution, hostility borrowing and etc. This behavior impacts on the operation efficiency of the public companies with the profit decreasing, some of those companies even emerging the situation of "empty shell", and making the minority shareholders mint loss, finally leading to borrowing difficulty. The behavior of the collusion is widespread in the modern enterprises in the world. It exposes the shortage of the corporate governance pattern of American as well as the shortage of the corporate governance pattern in Japan and Germany, especially the defects would be showed obviously when these two patterns be applied on the countries where have different culture background. At present, the reforms executed in many countries maybe account for that...
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