The Balancing Mechanism Of The Second Largest Shareholder Under Multiple Large Shareholders Structure

Over the past 30 years,a large stream of corporate governance research has focused on the conflicts of interest that arise from the separation of ownership and control.The first generation of research dealt with the agency conflicts in the typical corporation—widely owned by small investors but controlled by professional managers.In order to improve the principal-agent relationship,theprincipal tried to governance through internal governance mechanism and externalgovernance mechanisms.As public firms around the world are generally not widely held but rather are controlled by large shareholders,the second generation of research focused on the conflicts between controlling owners and minority shareholders.Traditional agency theories suggest that concentrated ownership provides large shareholders with incentives to monitor managerial opportunism,but also point out that the controlling owner may use corporate resources to derive private benefits of control,especially when her control rights are higher than her ownership rights.However,the company's principal-agent problems not only in external shareholders and managers,controlling shareholders and minority shareholders,but also appeared between controlling shareholders and other stakeholders.In the second type of agency conflicts,when in addition to a controlling shareholder of listed companies there are other major shareholders,the conflict between large shareholders may exist.Under multiple large shareholders structure,faced with the expropriation of controlling shareholders,how non-controlling shareholders play a checks and balances role has become increasingly being the focus of attention.But the equity-balanced research does not have a uniform conclusions,equity balances of failure is a realistic problem urgently to be solved,based on the second largest shareholder of balancing mechanism analysis is a feasible way of thinking.The central question is:what is the balancing mechanism of the controlling shareholder when the second-largest shareholder and the largest shareholder is no close relationship.Specifically,in respect of the second largest shareholder of micro-level body,what is motivation of the second largest shareholder give play to the role of balances?The second largest shareholder keeps in balance through what kind of way?How effect did the second largest shareholder has brought?In order to open the complex ownership structure governance black box.In this paper,the basic idea is:on the basis of predecessors research results,this study used data mining preparation and literature,theoretical research,game analysis,case studies and empirical research on photograph echo path,explore balancing mechanism of non-controlling shareholders.According to the study,the structure and content of this article is as follows:The first chapter,introduction.This chapter describes the background and significance of research and specific issues,indicating that the object of study and define the related concepts,clear framework for research,research content,research objectives,possible innovative ideas to propose researches and the methods of research.The second Chapter,review of the literature.This chapter summarizes this article is based on the theoretical basis,namely control theory and balance ownership structure theory.This chapter carried on to the domestic and foreign existing literature has combed with the commentary also.This chapter is about several major shareholders structure of large shareholders and corporate governance system review and comment on the study.Specifically,respectively on the phenomenon of multiple large shareholders,major shareholders of checks and balances,shareholder relations,review the governance role of the second-largest shareholder.The third Chapter,balancing mechanism of the second-largest shareholder.Through exploring initial analysis balance motivation,paths and effect of the second-largest shareholder.The fourth Chapter,analysis the balances motivation of the second largest shareholder.This chapter through the game model analysis why the second largest shareholder balances the largest shareholder,what are the specific factors affecting the balance of the second largest shareholder.The fifth chapter,the path of the second largest stockholder keeps in balance.This chapter through the case study analysis the second-largest shareholders,mainly through the power of the Board of directors or power of shareholders affecting government efficiency as an intermediate transmission mechanisms.Specifically,the second largest shareholder will introduce related shareholder,directors and so on to keep in balance.The sixth chapter,the balances effect of the second largest shareholder.This chapter through empirical studies to analyze what impact on the second-largest shareholder balances.Specifically,the second largest shareholder who introduced shareholders,residency director have which influence to the executive compensation performance sensitivity,and what kind of influence to the executive change performance sensitivity.The seventh chapter,conclusion and forecast.This chapter of the research provided a systematic summary of the whole article,give some inspiration,and pointed out the lack of research and future research directions.The main conclusion of this paper is:(1)As the second largest shareholder power continuously enhanced,in the face of the largest shareholder of expropriation,the second-largest shareholders to be able to compete with the largest shareholder.The second largest shareholder should be checks and balances when the largest shareholder invades the benefit.But in fact,the second-largest shareholder may not keeps in balance,because the second largest shareholder counterbalancing actions also affected by other factors.Specifically,the second largest shareholder balances mainly driven by cash flow right,legal protection of investors,nature of the equity,the second largest shareholder of balances ability mainly affected by the stake.(2)The balances path of second largest shareholder mainly involves two kinds:one kind is the second largest shareholders that introducing associated shareholders,namely the second largest shareholder introduces other associated shareholder in the surveillance process to strengthen own strength;The second kind is the second largest shareholder occupies the board of directors seat,namely the second largest shareholder or consistency shareholders active to presence director,so that they can in general meeting reflected the will of the respective,enhance the monitoring capacity of the Board.(3)the second-largest shareholders introduce associated shareholders or strive for board seats have a significant impact on the efficiency of the board of directors in state-owned enterprises.The second-largest shareholders introduce associated shareholders and strive for board seats affect the performance sensitivity of management compensation as follows.In the total sample,the second-largest shareholders introduce associated shareholders and strive for board seats not significantly affect the performance sensitivity of management compensation.When to distinguish the company's equity structure,under the multiple large shareholders structure,the second-largest shareholders introducing associated shareholders significantly enhance the performance sensitivity of management compensation,but under the single controlling shareholder structure not..In addition,The second-largest shareholders introduce associated shareholders and strive for board seats affect the performance sensitivity of managements' turnover as follows.In the total sample,the second-largest shareholders introduce associated shareholders or strive for board seats not significantly affect the performance sensitivity of managements' turnover;the second-largest shareholders introduce associated shareholders significantly enhance the performance sensitivity of managements' turnover,but striving for board seats not;when to distinguish the company's equity structure,under the multiple large shareholders structure,the second-largest shareholders striving for board seats significantly enhance the performance sensitivity of managements' turnover,but under the single controlling shareholder structure not.Compared with the previous literature,this article has the following characteristics:first,in perspectives of research issues,this article study the second-largest shareholder as a micro-subject to the checks and balances of the largest shareholder based on the relationship between the large shareholders.The vast majority of the previous literature are based on the shareholding structure,Studying the second to fifth or tenth largest shareholders on the checks and balances of the largest shareholder,take the non-controlling shareholders as a whole to study their checks and balances of the first big shareholder,only a few literature takes into account the heterogeneity between the non-controlling shareholders.Based on the failure of checks and balances of equity,the second largest shareholder of the equity analysis is a feasible way of thinking.Second,this article constructed the balancing mechanism model of the second largest shareholder.Existing studies more directly concerned with the second largest shareholders in respect of the impact on the performance of the company or the other governance research results,the balancing mechanism is rare.This article provided a useful and complementary explore in this regard.specifically analyzed motivation of balances,the path of balances and the effect of balances.Namely,to establish the" balances motivation,balances path,balances effect" of the mechanism model.