Research On The Association Between Ownership Structure And Majority Shareholders' Interest Flow

The inconsistency in the objective functions between controlling shareholders and minority shareholders usually will cause to serious conflict of interest between them. Due to deficiency of external supervision and diversity of equities, controlling shareholders may pursue their own interests at the cost of the minority shareholders'. Therefore, it has become an important matter that to halt the controlling shareholders' behavior of infringement of minority shareholder's interest by optimizing corporate governance structure, which should be solved presently. Researching on the connected transactions between majority shareholders and listed companies, this paper aims to discover the transaction between ownership structure and flow mode of majority shareholder's interests, and then to seek to feasible way to improve corporate governance and to protect the interests of minority shareholder's. The paper's conclusion and contribution is mainly as the following three aspects:Firstly, taking 705 non-financial firms listing in the Shanghai Stock Exchange A share market as a sample and all the firms, the paper separately researches association between different equity structures and the flow mode of majority shareholder's interest from two-way flow of interest between majority shareholders and listing firms. The results show, there is no relation between holdings position of majority shareholders and interest input to listing firms by majority shareholders, i.e. there is no necessary connection between ownership structure and majority shareholders' interest transfer to listing firms, and there is relation between holdings position of majority shareholders and listing firms' interest transfer to majority shareholders, i.e. there exists the phenomenon that majority shareholders snatch interest from the listing firms. And then through data analysis, the paper finds that when the proportion of holding is lower than 50%, there is weak correlation between the holding proportions of the first majority shareholders and interest flow, and when more than 50%, the correlation is stronger.Secondly, through one—way analysis of variance and two-factor analysis of variance, the paper discovers that the majority shareholders tend to snatch interests from the listing firms and thus infringe the interests of minority shareholders, and with the holding proportion increasing, the tendency becomes more and more apparent. The increment of holding proportion from the 2^nd majority shareholder to 5^th majority shareholder can curb the first majority's behavior of infringement of firm's interest and protect minority shareholder's interest to some extent. At the same time, the majority shareholder will infringe the firm's interest more seriously as return on net worth increases.Thirdly, through theoretical analysis and empirical test, the paper concludes that majority shareholders tend to transfer interest from firms and to infringe minority shareholders' interest. We believe that it is a feasible way for the improvement of corporate governance and the protection of the minority shareholders' interest to establish the mutually restricted ownership structure, to tighten up the internal control system, and to perfect the independent director system.