The Analysis Of Equity Governance Effects Based On Agency Conflicts

As the important internal governance mechanism, equity structure has attracted more attention recently. However, due to the limitation from related policies and capital market, the equity governance mechanisms of listed companies are ineffective in China. Researchers take extensive studies from different aspects, but do not have a coincident conclusion.Equity structure reform started in May of 2005, which provides a new opportunity to research equity governance mechanisms. By a series of interest balance mechanisms, equity structure reform compensates tradable stock shareholders for their losses due to the value shrinking in stock market, thereby circulating the non-tradable stocks. After the reform, although the non-tradable stocks can be traded do not means "full circulation of stock" according to the limited of related institution of capital market and the policy of non-tradable shareholders, the reform doubtlessly influenced the equity structures and the equity governance effects of listed companies. Based on this background, this dissertation analysis the equity governance effects of listed companies, tests the impacts of equity structure reform, nature of property right, and the degree of market competition on it, and finally provides related policy suggestions on contingency governance model construction according to the conclusions. The main content of this dissertation is as following:Chapter 1, Introduction. Based on the research background and significant of this dissertation, this chapter defines the research scope and related conceptions, and induces the research framework, methodologies, content, and innovation.Chapter 2, Literature Review. This chapter takes a review and comment on the relationships between equity structure and agency problems, which provides theoretical foundation for following analyses.Chapter 3, Related Theory and Basic Model. By introducing and summarizing the theory of corporate governance, this chapter gives the medium meaning definition of corporate governance. Afterward, this chapter reviews the related theory and basic model of equity governance effects and their influence factors, and finally sums up the research trends and the research predicaments of these fields in China. Chapter 4, Equity Governance Effects:based on the view of agency cost. Based on the medium meaning conception of corporate governance, this chapter classifies the agency conflicts into three dimensions, and established structure equation model to analyses the relationships between equity structure and agency cost. The final conclusions are as following:equity governance mechanisms have different governance effects on different agency conflicts, including that ownership concentration have positive governance effect on equity agency conflict and controlling right conflict; equity restriction have negative governance effect on equity agency conflict, but positive governance effect on controlling right agency conflict; controlling capability of state shareholder and legal person shareholder have positive governance effect on debt agency conflict, but negative governance effect on controlling right agency conglict.Chapter 5, Analysis of Equity Governance Effects after Equity Structure Reform. According to the conclusions of chapter 4, chapter 5 analyses the changing of equity structure, agency conflict and the relationships between them. The results show that:equity structure reform have direct influence on equity structure of listed companies, including the significant declining of state share and legal person share proportion, the decentralization of ownership concentration, and the advance of equity restriction degree. The changing of equity structure leads to diversifications of agency conflicts. Firstly, the equity agency cost is decreased, since that the share of companies decentralized from state shareholders to other shareholders who pay more attention on the development and long-term value of companies. Secondly, the equity governance mechanisms loss these governance effects on interest conflict between shareholder and creditor with the declining of state shareholder and legal person proportions. Finally, the agency conflict of controlling right is more intense after the reform, which is due to the significantly increased separation degree between cash flow right and controlling right.Chapter 6, Analysis of Equity Governance Effect in Different Nature of Property Right. Based on the property right theory, this chapter analysis the differences of agency costs between state-owned and non-state-owned listed companies, and the impacts of property right nature on equity governance effect. The results show that:the unclearly nature of property right contributes to multiple-principal agent relationships in state-owned companies, which reduces the governance effect of equity structure, and intensifies the incentives of large shareholder to converser expropriate other shareholders'interests. However, the nature of property right of state-owned companies has high governance effect on debt agency conflict, according to the homogeneity with their main creditor, state-owned banks.Chapter 7, Analysis of Equity Governance Effect in Different Market Competition Degree. According to beyond property right theory, chapter 7 analyses the impact of market competition degree on equity governance effect. The results show that:with the raise of market competition degree, the governance effects of equity structure are increased on equity and debt agency conflicts, and are decreased on controlling right agency conflicts.Chapter 8, Conclusion and the Construction of Contingency Governance Model. In this part, main conclusions of the dissertation are given, and the policy suggestions of contingency governance model constructing are proposed.The main innovations of this dissertation are:First of all, there exists innovation of research content. Considering the changing of equity structure after equity structure reform, the interest conflicts between creditor and shareholder will be serious increasingly. Hence, this dissertation defines the corporate governance by the medium meaning, which including the conflicts among shareholder, creditor and manager.The second innovation is research framework. Based on the medium meaning corporate governance, this dissertation suggests that using the indicators of agency conflict as the measurement of governance effect, which can be classifies into equity agency conflict, debt agency conflict and controlling right agency conflict.Final innovation is methodology. Attribute to the high correlation between variables of equity structure such as ownership concentration, equity restriction, proportion of state shareholder and legal person shareholder, introducing these variables in regression equation simultaneously results in multicollinearity. Furthermore, regression equation can introduce only one dependent variable at the same time. Consequently, this dissertation adopts structure equation model, which can introduce all agency conflict and equity structure variables.Otherwise, this dissertation also has following limitations:Firstly, this dissertation does not involve the capital market under the background of full circulation. Although the equity structure reform has almost been completed, the capital market of China does no realize the full circulation of stock. Thus, the liquidity of stock does not be included in this research.Secondly, this dissertation is not including other contingency factor of equity governance effects, involving company size, institutional factors, company growth stage and so on.Finally, this dissertation does not take the statistical test on the variables of agency conflict. The variables is selected according to the previous research, and adjusted by related institutional design in China.