Information Transparency And Private Benefit Of Control

Private benefit of control is the important contents of modern corporate finance, management and relevant theories on economic development (Dyck and Zingales, 2004) controlling shareholders grab personal interests has become a common fact(Shleiferå’ŒVishny,1997).According to the statistics, by the end of July 15th,2011. our capital markets already have 49 stocks being forced to ceasing on the market due to illegalized information, controlling shareholders violating the minority shareholders'interests, undercutting the listed companies. Controlling shareholders conquer personal interests, which are also called Tunnel behavior, possessing the feature of under cover. "Tunnel", "under cover" comes from asymmetric information and opacity. The feature of private benefit of control shows that there is some inner relationship between information transparency and private benefit of control. To study the information transparency influencing private benefit of control and detailed influential system from the asymmetric information angle contribute to curb interest violation and promoting the healthy development of our capital market, which also be the research topic of this paper.Most of current literatures study private benefit of control from the aspect of laws and. regulations as well as corporate management. Although there are a few foreign literatures trying to explain the reasons for private benefit of control from the aspect of information asymmetry, (Healy and Palepu,2001; Hope and Thomas,2008), their research cannot explain our capital markets'private benefit of control due to different laws and systems, in China, current literatures on information transparency mainly embodies information transparency mechanisms (Zhang, Zongxin,2006; Tan, Jingsong,2010), information transparency and corporate achievement (Lin, Youzhi, Zhang, Zongxin, You. jiaxing,2007; Zhang, bing,2009), Information transparency and corporate management (Liu, Yinguo, 2005; Gao, Lei,2007). Only a few literatures consider the relationship between information transparency and shareholders'interest violations, and the relationship between information transparency and shareholders'impropriate funds (Wang, Kemin.2009). Research shows this relationship leads to listed companies lack of motivation to expose high quality information to the public, which makes companies more opaque. (Li, Zengquan,2011). Most scholars regard information transparenc}" as an alternative index to study information disclosure influence on private benefit of control (Gao. Lei.2006). The research has made achievement, but it is still of obvious theoretical flaws.Based on the theory, the majority of research involves information disclosure, it is hard to analyze the system from the aspect of information transparency due to agency by agreement, incomplete contractual theory, lack of information delivery and efficient capital market. In addition, there are some obvious difference between specimen choice and index system due to our scholars regard the information disclosure as an analytic element, which makes our scholars make different conclusion and limitations with regard to information transparency. Meanwhile, current documents research information disclosure equal to information transparency, in fact, it is a misunderstanding in information transparency, this misunderstanding comes from lack of sufficient theoretical analysis on information transparency and lack of establishing theoretical framework concerning information transparency.Although information transparency and information disclosure belongs to information system, there are obvious difference in its connotation, method, ways and actions. Therefore, based on information disclosure, the research conclusion consists in to some degree of limitations, in fact, transparency includes exterior information environment, corporate information feature activities, information disclosure and exterior investors and distinguished information, information strategic decision and so on. In addition, due to in recent years.our laws and regulations, global financial crisis in 2008, interest reform, especially.our listed companies'information systems have been bettered, which makes current research unsatisfied social demand, so it needs study the relationship between information transparency and private benefit of control in the new realistic circumstance. Finally, current research cannot define private benefit of control in the scientific term, in other words, it confuses premium transfer with related transaction undercut, in fact, there is obvious difference in research fields, methods and forms of measurements, which inevitably leads to different conclusions.In order to make up current research's shortcomings, based on the private benefit of control and introduction of efficient capital market theory and signal theory,the dissertation construct a analytic framework with regard to information transparency such as exterior environmental information corporate feature and information disclosure meanwhile this thesis involves asymmetric information inhibiting private benefit of control, information transparency and use Chinese listed companies'real sample size to analyzes and inspects the influence on information transparency and private benefit of control,The main research objectives are listed in 3 aspects. The first one is to define the connotation of information transparency, and differentiate discrepancy between information transparency and information disclosure, and definite the theoretical basis and mechanisms between information transparency and private benefit of control in order to make up analytic framework. In addition, it studies the information transparency influence on private benefit of control and definite the effect of information transparency in the course of shareholders'acquiring private interest. Finally, under the circumstance of studying current information, it analyzes the private benefit of control's whole level of our listed companies.In order to achieve the previous objectives, the paper is divided into four levels:the first one is to analyze the current flaws and shortcomings and definite realistic meaning and theoretical meaning on the basis of interrogating, literature review, research background and research theme. The second one is to analyze from the theory,, introduce efficient capital market theory and signal theory as this paper's theoretical framework. It defines information, information transparency and private benefit of control in order to differentiate the two private benefits of control. The third one is to make empirical research, based on the previous analysis, it can make up analytical index and inspect information transparency influence on private benefit of control in detail. The fourth is to draw the conclusionThe research conclusion embodies 3 aspects:The first one is:Information transparency consists of exterior information environment, corporate information feature and information disclosure. Exterior information environment is premise, corporate information feature is fundamental while corporate information disclosure is condition-prerequisite, Information disclosure is the connection of information transparency, but information disclosure is not equal to information transparency. The second one is information transparency influence on private benefit of control, the lower information transparency, the higher acquisition of private interest, to enhance information transparency is beneficial to curbing private benefit of control. Shareholders create the conditions for acquiring control rights by means of installing complex pyramid structure, manipulating information lowering information transparency and adding information opaqueness. To install information barriers and implement information manipulation is the main method of controlling shareholders" achievement of private benefit of control.Information opaque shows inner information asymmetry and exterior information manipulation. Exterior information manipulation is divided into positive information manipulation and negative information manipulation. The positive information manipulation shows the increase in listed companies'earnings per share while negative information manipulation shows information violation and abruption in both rights.The research indicates that there is remarkably positive relationship between earnings per share and controlling rights, at the same time, it shows the main purpose is to increase earnings per share and acquire more controlling rights for every controlling shareholder.The third one is under the current circumstance, the private benefit of control on average is 12.66%..To compare with the research findings made by studies in China during 2007-2009, the private benefit of control's level has been decreased, but it's still higher than the average of the listed company's ROE of recent years. To inhibit the controlling shareholders from grabbing private interests and protect the minority shareholders'interests is still a long-term and urgent assignment faced by the listed companies in China.This dissertation is divided into 6 parts, the basic contents of each part are listed as follows:The first part is introduction. The main purpose of this part introduces the basic issues including the background, the significance, research topic, research objectives and research ideas, the chapter structure of the arrangement as well as research methods.The second part is literature review. The main part involves domestic and international current literatures with regard to information transparency and private benefit of control, including influential elements, computations and the interconnections between information transparency and private benefit of control, meanwhile puts forth its flaws and shortcomings.The third part is on the theoretical basis for the role of information transparency. Based on the efficient capital market theory and signal theory it demonstrates information transparency influence on the capital market, under the circumstance of information asymmetry, information disclosure realizes the information delivery and solve information asymmetry by means of signal delivery and information recognitionThe fourth part is theoretical analysis on information transparency and private benefit of control. The thesis consists of analytic framework with regard to information transparency which contains exterior environmental information, corporate feature and information disclosure, meanwhile it combines real cases of our listed companies with information opaque and information transparency influence private benefit of control to take apart controlling shareholders'manipulating methods.The fifth part is empirical research. According to the previous analysis, based on experimental data of our listed companies' transfer of share premium by means of univariate analysis and aggregate variable, the paper inspects and verifies information transparency on private benefit of control and information transparency influences on the private benefit of control.The final part is research findings. Based on the research contents, the paper can draw the conclusions and polices and suggestions, meanwhile, it puts forth drawbacks and future research direction.The main contribution of this dissertation lies in:firstly, it analyzes the information transparency influence on private benefit of control from the information transparency aspect, meanwhile. it draws the conclusion, which to some degree, can supply a gap in this field and offer reference on how to curb shareholders private interests. In addition, it makes up theoretical analytic framework and comes up with the concept on inner information asymmetry and manipulating information asymmetry. Shareholders' information manipulation is divided into positive direction and negative direction. The two information manipulation embodies shareholders'support and undercut the listed companies, and its supportive purpose is to acquire controlling rights. Corporate control power accompanies information control power, controlling shareholders acquire corporate control power while they are acquiring the corporate information control power, which shows shareholders' inner information advantages. Under the condition of unfulfillable separation between corporate control power and corporate information, to limit and regulate shareholders' manipulating asymmetry becomes inevitable choice to curb shareholders'private interest.The meaning of differentiate information asymmetry and information manipulation consists in that it demonstrates the channels to curb private benefit of control:inner asymmetry needs regulate by means of laws and regulations, while manipulation asymmetry needs restrict by means of monitor. Thirdly, under the circumstance of current information, based on the establishment of private benefit of control, private benefit of control is divided into control power premium by transfer and related transaction undercut, and it comes up with difference of the two ways to get personal interest in research field, methods and computation, it corrects and straightens out the confusion in definition of private benefit of control in the current reviews, which lays a solid foundation for further research.