Research On The Mechanism Of The Allocation Of Corporate Control And The Equilibrium Of The Shareholders’ Interests

In the theory of corporate, it is the allocation of control rights and the game among corporate shareholders that draw the attention of both the theoretical circles and the academic circles. As the extension of corporate scale and the development of firm’s organization, the ownership and the control rights have been separated, which leads to the principal-agent problem. The traditional principal-agent problem, namely the conflicts between shareholders and managers, is now called the first kind of principal-agent problem. As the development of the firm’s equity structure, the conflict arises between the group of majority shareholders, who has less number and holds large percentage of shares, and the group of small shareholders, who has larger number but each holds less percentage of shares, which is now called the second kind of principal-agent problem, and the conflicts between the shareholders and managers change to the conflicts among the majority shareholders, the managers, and the minority shareholders over the division of the firm’s earning, and how to maximize their own profit.First the paper review the literature concerning about these two kinds of principal-agent problems both around the world and in China. Then the paper discussed allocation problem of control rights in the mature markets and analyzed the cause, the form, and the influence factor of the problem. Third, the paper find that, for the listed companies in China, the markets and the regulations are immature, which leads to all kinds of problems in the shareholder systems, management incentive system and the protection system for small shareholders. Moreover, the huge amount of especial state-owned corporations makes game condition more complex among the allocation of ownership, managers, overwhelming shareholders, big shareholders, and small shareholders.In this paper, the paper establish a complete theoretical modeling system according to the practical situation for the listed firms in China, which analyzes the gaming scene for both that between big shareholders and that between big shareholders and small shareholders. Moreover, the paper extend the model to the situation that the managers have been involved, and analyze the decision making process and influence factors in the game among the three counterparties. At last, the paper take the role that the government’s supervision department plays into consideration, and analyze the different decision making processes, allocations of the firm’s income, and public benefits before and after the supervision have been brought in.After the complete modeling system have been established, the paper discuses the practical cases of the allocation of control rights and the game of shareholders for the listed stock companies in China, and employees the model to analyze the influences for the reallocation of the control rights and the results for the Tunneling of the big shareholders. According to the problems occurred above, the paper offers some suggestions on how to protect the rights for each counterparties in the shareholders’ game from all of corporation level, supervision system and law environment.