Study On The Capital Operation Agency Problem From Controlling Shareholders

The logical research starting about modern corporate governance has changed, transferring from agency problems between shareholders and top management to that between small shareholders and controlling shareholders. The current situation about single-largest-shareholder in listed companies in China makes the agency problems between small shareholders and controlling shareholders as the core issue. In recent years, with the frequent capital operation used by China's listed companies, many domestic researchers have applied many kinds of research methods in this field .All the research fruits indicated that listed companies' performances may raise in short time or reduce consistently after using capital operation which can not be explained by the existence theory in this field. So this paper, taking core agency problem as a research starting, will study the capital management in our country in order to explain the strange phenomenon mentioned above.There are five chapters in this paper. The first chapter is introduction. In the second part, analyze the basic theory about the controlling shareholders and their controlling rights, the reasons causing the controlling shareholders' agency problems and their capital operational behaviors. In the third part, author set the controlling shareholders' problems that are prevalent in China as the start point to research their capital operation. Author divided all samples into three groups: supportive capital operation, the tunneling ones and others. Through analyzing the performance differences among three groups in different years and the differences between companies with capital operational activities and all samples in long-term performance, the paper indicates that controlling shareholders have special motivations for tunneling and supportive capital operation. Controlling shareholders' supportive activities are defined as the capital operation with the motivation of rationing shares or avoiding deficit which can improve the companies' performance in short time. Controlling shareholders' tunneling activities are defined as capital operational activities without the motivation of keeping some qualifications but for the controlling rights and private benefits which can deduce the companies' performances. In the forth chapter, after analyzing the agency behaviors of direct fund occupied by larger shareholders, the related party transactions between larger shareholders and high dividends, the paper puts forward the hypothesis of controlling shareholders' capital operation. And then analyze the agency behaviors of controlling shareholders' harming capital operations in the same year and the whole agency behaviors after the capital operation. That is the controlling shareholders' harming activities during and after capital operation. In the fifth chapter, author got the conclusions and gave advices about how to restrain the controlling shareholders' capital operational agency problems.