Study On The Agency Problem Of Controlling Shareholder In China's Listed Companies

The agency problem of controlling shareholder (APCS) is the pioneering issue of corporate governance. The thesis surveys the academic researches on APCS and then analyzes the APCS in China's listed companies. The thesis proves that APCS exists and evaluates the agency costs in China's listed companies. Empirical results from big sample show that firms with controlling shareholder and top managers coming from controlling shareholder have higher market value than firms without controlling shareholder and top managers not coming from controlling shareholder. Ownership held by controlling shareholder is negatively correlated to firm value. Firms with different identities of controlling shareholder have different market value. Specially, firms with government as the ultimate controlling shareholder have lower market value than firms with family, foreign owner and firm as the ultimate controlling shareholder. We define the percentage of value discount of firms with controlling shareholder by comparison with firms without controlling shareholder as agency costs of controlling shareholder. The agency costs of controlling shareholder averages 11%-16%. Above empirical results suggest that the agency problems of controlling shareholder do exist in China's listed companies. And specially, the agency problems of controlling shareholder are especially serious in firms with government as the ultimate controlling shareholder.The thesis proves that controlling shareholder employs related-party transactions that damage firm performance, as the means of transferring resource from listed companies and of expropriating minority shareholders. I classify all of the related-party transactions into 11 types, from which 7 types that are negatively correlated to firm performance are distinguished. Empirical results from big sample show that related-party transactions damaging firm performance are more in firms with controlling shareholder and top management from controlling shareholder than firms without controlling shareholder and top management not from controlling shareholder. The percentages of the shares hold by controlling shareholder and of the membership of the board of director sit on by controlling shareholder positively correlate to related-party transactions damaging firm performance. These results suggest that controlling shareholder employ related-party transactions as a means of transferring firm resource and of stealing wealth of minority shareholders.The thesis proves that controlling shareholder has incentives to manipulate earnings. Empirical results from big sample show that the incentives to manage earnings in firms with controlling shareholder and top management from controlling shareholder are greater than firms without controlling shareholder and top management not from controlling shareholder. The percentages of the shares hold by controlling shareholder and of the membership of the board of director sit on by controlling shareholder positively correlate to earnings management. These results mean that controlling shareholder manipulates accounting report via consolidating control of the firms.The thesis proves that cash dividend is a means of transferring firm resource and of expropriating minority shareholders used by controlling shareholder. Price discount of non-tradable stock hold by controlling shareholder to tradable stock hold by minority shareholders results controlling shareholder have higher returns than minority shareholders from the same cash dividend payout ratios. Empirical results from big sample show that firms with controlling shareholder pay more cash dividends than firm without controlling shareholder. The percentages of the shares hold by controlling shareholder positively correlate to cash dividend payout ratio. Firm growth correlates with cash dividend payment in firms with controlling shareholder and the ownership hold by controlling shareholder. And it is more serious that cash dividend payment significantly negatively correlated to firm performance. These results suggest that...