Research On The Relationship Among The Excess Control Of Major Shareholder,corporate Governance Mechanism And Stock Price Crash Risk

A sound and stable capital market is of great significance to promote the rapid,sustainable and high-quality development of Chinese economy.Although Chinese capital market has developed rapidly,it started late,the market supervision mechanism and corporate legal system need to be improved.As a result,the listed companies' fraudulent issuance,stock price manipulation,insider trading,major shareholder's encroachment on the company's interests,financial fraud,and information disclosure violations frequent occurrence and repeated prohibition,which lead to the lack of stability of Chinese capital market,and the crash risk is higher.The stock price crash leads to the rapid evaporation of shareholders' wealth,especially the loss of minority shareholders,which hits or even destroys investors' investing enthusiasm and confidence in capital market,and hinders the healthy development of the capital market,reduces the efficiency of resource allocation,and even induces financial crisis.Therefore,it is of great theoretical and practical significance to explore the factors that affect the crash risk,and proposing targeted preventive measures to reduce the crash risk of listed companies in China,and to promote the stable and healthy development of capital market,improve the efficiency of resource allocation,and protect the interests of investors.Regarding the research on the stock price crash risk,domestic and foreign scholars have carried out research from different perspectives,however,there is no literature to explore the impact of the largest shareholder's excess control on the crash risk under the background of Chinese institutional environment.In fact,major shareholder has an important influence on financial activities and strategic decisions of the company.Most of Chinese listed companies are controlled by major shareholder,and the phenomenon of excess control is common.There are mainly two kinds of agency problems in listed companies under the control of major shareholder,namely,the agency problem between shareholders and management(the first kind of agency problem)and the agency problem between large shareholders and minority shareholders(the second kind of agency problem),and the second kind of agency problem has become the core problem of corporate governance under the control of major shareholder.Different from the traditional measurement method of the control of major shareholder,this paper is based on the actual operating conditions of listed companies in China,and uses the Shapley Power Index method of cooperative game to re-measure the control of major shareholder,then on this basis,we measure the excess control of major shareholder.Due to the late establishment of Chinese capital market,the capital market system and corporate governance mechanism are still imperfect,and there are significant differences in the quality of corporate governance among listed companies.Therefore,this paper systematically analyzes the relationship among the excess control of major shareholder,corporate governance mechanisms and stock price crash risk.This paper takes 2003-2018 A-share main board companies as research samples,and uses OLS regression and other econometric methods to empirically test the research hypotheses.The main conclusions are as follows:Firstly,in terms of the relationship between excess control and stock price crash risk:(1)The excess control significantly increase the crash risk,this indicating that excess control has a significant crash effect.(2)The crash effect of excess control is significant in both state-owned enterprise group and non-state-owned enterprise group,and the crash effect is more significant in the non-state-owned enterprise group.(3)No matter whether the stock market is a bull market or a bear market,excess control has a significant crash effect,and the crash effect in the bear market group is more significant.Secondly,in terms of the relationship among excess control,the behaviors of major shareholder and stock price crash risk:(1)The increasing of excess control will strengthen the tunneling behavior of major shareholder,encourage major shareholder to play a more tunneling role,and will weaken the supportive and supervision behavior of major shareholder,and encourage major shareholder to play less supporter and supervisor role.(2)The increasing of major shareholder's tunneling behavior significantly worsens crash risk.the increasing of support behavior and supervision behavior significantly inhibit crash risk.(3)More tunneling behaviors,less supportive behavior and less supervision behavior have a partial mediating effect on the relationship between excess control and crash risk.That is,excess control exacerbates crash risk through more tunneling behavior,less supportive behavior and less supervision behavior.Finally,in terms of the relationship among excess control,corporate governance mechanisms and stock price crash risk:(1)The improvement of corporate governance mechanisms significantly reduce crash risk.Specifically speaking,improving the independence of the board of directors,the increasing of management shareholding ratio and institutional investors' shareholding ratio,the improvement of auditor industry expertise and legal protection for investors will reduce crash risk.(2)Improving the independence of the board of directors,the increasing of managerial ownership and institutional investors' shareholding ratio,the improvement of auditor industry expertise and investor legal protection will weaken the positive correlation between excess control and crash risk.The major innovations of this paper are as follows:(1)It enriches the research on the influencing factors of crash risk and opens up a new perspective of the research on crash risk.Based on the actual situation and institutional environment of Chinese capital market,this paper explores the impact of major shareholder'excess control on crash risk,enriches and expands the research on the factors affecting of crash risk.(2)It not only expands the relevant research results of excess control,but also enriches the relevant research on the economic consequences of major shareholder' behaviors,and deepens our understanding of major shareholder' behaviors and the role of major shareholder in corporate governance.It enriches and supplements the research literature on the role of major shareholder in corporate governance.(3)This paper expands the corporate governance factors that affect crash risk,and also reveals how the relationship between excess control and crash risk changes with the different corporate governance mechanisms.which can deeply grasp the mechanism of corporate governance mechanisms on crash risk,and whether the relationship between excess control and crash risk depends on the quality of corporate governance,thus expanding the relationship among the excess control,corporate governance mechanisms and crash risk.Through this study,we can comprehensively and systematically understand and grasp the relationship Among the excess control,corporate governance mechanisms and stock price crash risk,which helps to make up for the gap in the existing literature,expands and enriches the existing theoretical and empirical research,and profoundly reveal the role of major shareholder in capital market and its impact on the agency problems.This paper is helpful to explore the incentive and restraint mechanism of major shareholder,inhibit the tunneling behavior of major shareholder,strengthen supportive behavior and supervision behavior of major shareholder,improve the corporate governance mechanisms and agency problems,improve the quality of listed companies and the stability of capital market,promote the healthy development of capital market,and further strengthen its ability to serve the entity economy,dispel many doubts about the crash risk are of great significance.Finally,according to the research conclusions,we put forward relevant policy recommendations for the decision-making reference of the Securities Regulatory Commission and relevant regulatory authorities,so as to strengthen and improve the corporate governance mechanisms and market mechanisms,and establish an effective incentive and restraint mechanisms for major shareholder,improve the information transparency of listed companies,reduce the investment risk of investors and crash risk,improve the allocative efficiency of resources and promote the healthy development of capital market and entity economy.