Institutional Realization Of Shareholder Activism In Chinese Listed Companies

Previous research indicates a direct relationship between investor protection and market valuation,number of listed companies as well as the efficiency of resources allocation among listed companies.Protecting investor interests has always been a basic principle of Chinese securities regulatoion,but due to various reasons,law on books has yet to turn into law in action.A gap exsits between design of the institution and its actual operation.In developed securities markets,investor protection is realized through a combiniation of legislative protection,public enforcement and investor selfprotection,the former two being the basis of investor self-protection and empowering investors.In China,over-reliance on public enforcement puts restraints on mechanisms of investor self-protection that could otherwise been effective.Shareholder activism is a mechanism that enables outside shareholders to self-protect,provides some check and balance on corporate insiders as well as improves corporate governance.The Chinese legal system provides channels similar to those in developed markets,through which shareholder activism can be carried out,but in reality those channels are rarely utilized.This speaks to the possibility that some micro-mechanisms contained in those channels fail to provide enough incentives for outside shareholders to utilize such channels,or even constitute barriers for outside shareholders.Therefore,this dissertation conducts a cost-benefit analysis for outside sharheolders to participate in corporate governance,and on the basis of such analysis discusses the imperfections and incompleteness in the channels provided in Chinese legal system for shareholder participation,and offers policy suggestions for improvement in order to boost outside shareholder participation.On the basis of overall improvement on those legal channels,due to the significant role played by institutional shareholders in corporate governance of listed companies,this dissertation discusses how to guide institutional shareholders in China to participate in corporate governance of listed companies.This dissertation analyises the shareholding preferences of the Chinese public pension fund,public offerings of fund and insurance funds with respect to corporate governance with an eye to find the necessary elements required for the role of a fit institutional supervisor.On the basis of such findings,this dissertation provides policy suggestions for nurturing such elements as well as providing positive incentives for participation.The First Chapter discusses the significance of shareholder activism for corporate governance as well as how shareholder activism can potentially alleviate some specific problems that have long plagued Chinese listed companies.Based on previous research,the Second Chapter introduces the formal channels for shareholder activism to be carried out.It is an“as is”introduction of legal channels provided in the Chinese legal system for outside shareholders to participate in corporate governance.The Third Chapter studies the status quo of the utilization of those legal channels,and discovers that although the law provides channels for participation,such channels are not being sufficiently utilized by outside shareholders,and are sometimes even reduced to control-enhancing tools of corporate insiders.By conducting cost-benefit analysises,this chapter discovers how some micromechenisms contained in such channels often constitute barriers for outside shareholders to utilize such channels.Based on anylysis of the previous chapter,the Fourth Chapter offers suggestions for improving those aspects that put restraints on the utilization of legal channels by outside shareholders.This Chapter also discusses how to enhance invstorss ability to utilize such legal channels through investor education.The Fifth Chapter explores the prospect of guiding fit institutional investors to participate in corporate governance.Based on empirical analysis of shareholding preferences regarding corporate governance demonstrated by different types of institutional shareholders in China,this Chapter seeks to locate elements that are required for a fit institutional supervisor,and offers policy suggestions for nurturing such elements as well as provideing positive incentives for fit institutional supervisors to participate in governance.