Expropriation Of Controlling Shareholder

It is generally agreed that, in the highly developed security market such as the USA and the UK, the share of the listed company is disperse. Usually there's no controlling shareholder, thus, the expropriation to minority shareholders by controlling shareholder does not exist. However, it's common all over the world that concentrated corporate ownership is predominant. And it's a quite serious problem that the controlling stockholders usurp on minor stockholders. The interest of controlling stockholders is not in accordance with minority stockholders, so the expropriation to minority shareholders by controlling shareholder becomes the major agency problem. For his own benefit, controlling shareholder might transfer the assets and profit from the firm in any way possible, which expropriate the interest of other shareholders, and cause the"tunneling"effect.Especially in our country, it's a commonplace that in the listed company, there's a controlling shareholder who has high proportion of shares. And because of the Special Condition of the security market in our country, the controlling shareholders usurp on minor shareholders'interest frequently, it concentrated on the listed company's controlling shareholder depredating the minority shareholder's interest. Under the circumstance of imperfection of relevant laws and regulations and poor protection of investors in our country, affiliate transactions have become the main direct approach for the controlling shareholder to expropriate the interests of the minority shareholders and transfer the corporate resources. Added to this, the controlling shareholder expropriate minority shareholders by earning management and dividend distribution.How to bind the controlling shareholder is not only microscopic scale of corporate governance, it affects healthy development of the security market and the increasing of the economy. The main contribution of our paper is that, based on previous studies about expropriation by the controlling shareholder, the special condition of Chinese security market, and the governance of listed company, we study on the formation of control power, the effects of the controlling shareholder, the reasons of the expropriation of Controlling Shareholder and the methods of the expropriation of Controlling Shareholder, and the three major expropriation: affiliatedtransactions, surplus management, dividend distribution, in order to find the measure to prevent and alleviate the expropriation by controlling shareholder from the policy and legal system prospect.