Emperial Research On The Balance Mechanism Of Big Shareholders In Chinese Listed Firm

This paper first ystematically comb the theoretical and empirical literatures on shareholder balances mechanism,as a starting point and theoretical support for fol-lowing empirical research.On this basis,based on the samples of Chinese listed firrm from Shanghai and Shenzhen stock market between 2004?2010,we found that the absolute controlling of the largest shareholder's still prevails.In the State-owned enterprises,over 90%of the company's largest shareholders have absolute control,and 87%of those do not exist shareholders balances mechanism.This indicates that SOE's "one share dominance" is very popular,and more balances mechanisms prevalent in private enterprises.On this basis,this article uses some econometric models to check the effect of balance mechanism between major shareholders of Chinese listed companies,and we mainly have three conclusions.First,the effects of balance mechanism,on the entren-chment related transactions,are obviously different,between an absolutely controlling ownership strcture and a non-absolutely controlling one.When under an absolutely control of the controlling large shareholder,other big shareholders could hardly play a restraining effect on personal gain;While under the relative control between several large shareholders,each shareholder of the balance mechanism can play a role con-straints on personal gain.Second,there are three aspects of Fund ownership in the balance mechanism:1)Comparing to the personal shareholders,the institutional investors do have an positive effect in preventing EPRT;2)Comparing to the general legal person shareholders,the fund investors do have an positive effect in preventing EPRT;3)The more concen-trated and the more stable Fund shareholding is,the more conducive to the perfor-mance of its supervisory functions,in preventing the companies'ERPT.Conversely,if the Fund shareholding is sparse,or short-term fluctuated,it will be difficult for them to play an balance role.Third,we also found that in the lower level of investors legal protection stage,increasing the ownership spread is able to play a positive role;But as the legal pro-tection level raised,further enhancement of equity dispersion will not result in the significant decline of ERPT.Finally,on the basis of those empirical test,this article perspectively makes some political recommendations in six areas,combined with Chinese actual situation.Those are equity diversity,institutional protection,shareholders' rights,information disclo-sure,the Board of Directors,and the independent directors.