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A Study On Determinants Of Private Benefits Of Corporate Control: Theory And Evidence From Chinese Listed Companies

Posted on:2008-05-16Degree:DoctorType:Dissertation
Country:ChinaCandidate:C N LinFull Text:PDF
GTID:1119360215990023Subject:Technical Economics and Management
Abstract/Summary:PDF Full Text Request
With the study focus of corporate governance transferring from the traditional"shareholder--manager"interest confliction to the agent problem between controlling shareholders and minority shareholders, private benefits of control (PBC) have already been the core and stress of the study literatures of corporate finance and corporate governance. How to curb the expropriating behavior of controlling shareholders is a worldwide problem now.Based on the PBC problem of Chinese listed companies, the thesis estimated the PBC level, analyzed the PBC size and it's major characteristics and therefore primarily discussed the effect mechanism and degree of the major influential factors considering corporate characteristics and internal governance mechanism. The result will provide theoretical support and policy advice to further standardize and perfect the corporate governance of Chinese listed companies.There are three parts in this paper. Corresponding contests and conclusions are as follows:First part of this paper includes chapter 2 and chapter 3. In chapter 2, the contractual theory of the firm, the agency theory and the corporate controlling theory were first introduced & remarked, the fundamental gist of the inbeing and estimation of PBC were theoretically analyzed, a theoretical analysis framework of PBC was designed and the main literatures about the estimation and influential factors of PBC were reviewed and commented. In chapter 3, the system background of Chinese listed companies was analyzed based on the controlling features of listed companied, the actuality of controlling market and the status of minority shareholders'protection. It's the theoretical basis and realistic background for the successive empirical study.Second part of this paper includes chapter 4, chapter 5, chapter 6 and chapter 7. It's the core of the paper.In chapter 4, based on the foreign block trade premiums method, an estimation model of PBC for Chinese capital market was designed considering the insufficiency of the estimation method of our country, and a result was found out that, on average, the value of PBC among Chinese listed companies is about 16%, a relatively high level after evaluating. In chapter 5, the proportion of equipment and the degree of industry monopoly were selected as variables after the literatures of the relations between industry characteristics and PBC were reviewed and used to verify the influence of industrial characteristics to PBC through non-parameter test method. Results show that: The PBC of the Chinese listed companies has industrial characteristic,and the differences of PBC will be more significant with the degree of inter-industry differences increasing;There are significant difference among the PBC of different industries, but the PBC among the sub-industries of manufacturing industry hasn't significant difference;About 17.2% of the differences between industrial characteristic and PBC can be explained by industries, and it is rather stable when the other non-industrial factors were considered;As the influential factors of PBC, the working mechanisms of the proportion of equipment and the degree of industry monopoly is identical with the theoretical inference,but different with the empirical evidences in developed countries.In chapter 6, the influence of company characteristics to PBC was empirically studied considering the special system background of Chinese listed companies and other correlative study results. Results show that: the company characteristics and the stock transfer characteristics including tradable share size (absolute size), corporate size, financial status, proportion of stock transfer and holding proportion of controlling shareholders after stock transferring have significant influence on the PBC of Chinese listed companied; the company characteristics including tradable share size (relative size), financial lever and agent cost have no significant influence on the PBC of Chinese listed companied; in a whole, the company characteristics (and the stock transfer characteristics) have limited interpretation to PBC, the PBC of Chinese listed companied may be much more influenced by many other factors.In chapter 7, the internal corporate governance was studied to find other influence factors of PBC. Based on the theory that ownership structure is the impact of the level of PBC and on the background that central and local governments fulfill the investment person responsibility respectively, the central and local Chinese State-owned Property Committee have become the ultimate controlling shareholder of Chinese listed companies, a through empirical study was conducted on the tunneling of majority shareholders from the two perspectives: the ultimate control models and the stake of the largest shareholder. Results show that: 1.the PBC of the Chinese listed companies controlled by the central governments is lower than the companies controlled by the local governments; 2.Among the companies controlled by the local governments, the PBC of the companies that indirect controlled by the governments is higher than the companies that direct controlled by the governments; 3. As the stake of the largest shareholder is below 50%, the effect of PBC on the stake of the largest shareholder is positive. It shows that the expropriation effect is obvious as a whole. But as the stake exceed 50%, contrary to the alignment effect, the PBC of the companies direct controlled by the central governments keep a high level. 4. The diversity of PBC can explain the different corporate value under the various structure of ownership to a large extent.Third part of this paper includes chapter 8. Based on the conclusions of part 2, policy proposals of solving PBC problem by modifying the behavior of controlling shareholders and improving the corporate governance were put forward. These proposals included: 1)paying more attention to industry characteristics; 2)reviewing the scale and financial status of listed company; 3)cultivating and standardizing the debt controlling effect and the independence director system; 4)emphasizing the construction of law environment, information disclosing and media supervising.
Keywords/Search Tags:Controlling shareholders, Private benefits of control, Influence factors, Ownership arrangement
PDF Full Text Request
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