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Economic Harm To The Controlling Shareholder Accounts Owned Behavior And Approach

Posted on:2007-05-10Degree:DoctorType:Dissertation
Country:ChinaCandidate:D D LiuFull Text:PDF
GTID:1119360212984641Subject:Accounting
Abstract/Summary:PDF Full Text Request
Expropriation of the listed company's capital by controlling shareholders to their interests is a prevalent problem in China's capital market. This action has a severe impact on the listed company's routine operations and violates the interests of all parties concerned, and gradually becomes a tumor that obstructs the healthy development of the capital market. In August 2003, CSRC and SASAC issued On Regulation of Capital Deals and Assurance between Listed Companies and Related Parties, proposing the expropriation of the listed company's capital by controlling shareholders and issueing some practical supervision measures on revising and preventing expropriation. In the following three years, many policies are issued。 But till August 2006, 123 componies' capital is still expropriated by their controlling shareholders, and the amout of the expropriated capital reach 29,405 million. Under such circumstances, a research on the cause, the consequences and possible solutions to the capital expropriation by controlling shareholders presents both theoretical and realistic meaning.Based on Contract Theory, this paper first expatiates on the historical and economic causes of the control power of controlling shareholders, with which related ideal contract relations between controlling shareholders and medium and small shareholders and creditors are finally deduced. This dissertation then points out that the absence of protective measures of the above-mentioned incomplete contract in China's transforming economic system made it possible for opportunities' actions typified by the controlling shareholders' expropriation to become real. With the 2002, 2003, and 2004 Shanghai Stock Exchange statistics, the dissertation argues that the expropriation by controlling shareholders has done great harm to the listed companies and related parties economically. In the end, under the direction of law and economics, the thesis puts forward some suggestions on improving the measures already taken after an analysis of how the expropriation comes into being.The conclusion of this dissertation is that controlling shareholder's expropriation of the capital of listed companies is in breach of an ideal contract relation between controlling shareholders and medium and small shareholders and creditors. Suchexpropriation by controlling shareholders has done great harm to the listed companies and related parties economically. The three measures so far taken by the state, i.e. improving the structure of corporate governance, enhancing administrative supervision, and imposing legal punishment, havn't completely attained expected effect. Based on the reasons why these measures are ineffective, the thesis proposes a series of practical solutions including boosting the work division and cooperation between independent directors and supervisors; repositioning the security market; clarifying the core and edge of different levels of the laws; raising the efficiency of the security supervision departments; as well as introducing disregard of corporate personality.
Keywords/Search Tags:Controlling shareholders, Expropriation, Contract Theory, Law and Economics, Solutions, Disregard of Corporate Personality
PDF Full Text Request
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