Research On The Ownership Structure And The Large Shareholders' Expropriate Behavior

The central conflict of interest in the modern corporation is seen as opposing large shareholders and minority shareholders. Since 1990s, the benefit of having multiple shareholders has seen as limiting their expropriation. Because of the special ownership structure, the expropriation is more popular in China.Building on the model analysis, we compare the protective ability between the structure with multiple shareholders and with a single controlling shareholder. The article goes further to research on the majority shareholders'incentives to collude with or monitor the largest shareholder. Using data on listed firms of Shanghai stock exchange market, we show consistent with our model, 1) the firms with the multiple shareholders that supervise each other are more efficient to protect the minority shareholders than the firms with one single controlling shareholder; 2) the firms with the multiple shareholders that supervise each other are more helpful to secure the small shareholders than the firms that the large shareholders collude with each other.This paper suggests that multiple shareholders that monitor each other can efficiently limit the private benefits extraction in China. So Chinese listed companies should first remold the qualified agents for state-owned shares, and then change the ownership structure from one single shareholder to multiple shareholders.