Study On Violations Of Controlling Shareholders In China's Listed Company Based On The Reform Of Share Splitting

In recent years, the focus on corporate governance has been transferred to the agency problem between the controlling shareholder and minority shareholders. The reform of share splitting in China's securities market will be completed soon. It weakened against the institutional basis of controlling shareholders violations, but essentially not changes the ownership structure of listed companies; controlling shareholder violations will still exist, and could evolve into a more complicated form. Therefore, to make the theoretical analysis of controlling shareholder violations and forecast its trends under the background of the full circulation and then make the relevant control measures will undoubtedly have important practical significance.Firstly, this paper set out to build a theoretical model to expound the mechanism of controlling shareholder violations. Base on this, the author think that after the complete completion of the reform and truly achievement of full circulation , during the static period when the external and internal conditions established, controlling shareholders will make trade-off between the interests of violation and the amount (the decline in equity values plus the violation costs )to determine whether to exert the violations .On this basis, controlling shareholder then choose different way of violations under corresponding way of shareholding. Overall, after the reform of share splitting, all kind of ways of controlling shareholders violations will coexist. The ways of tunneling may be reduced; the relative acts of manipulation of stock prices will increase.Secondly, the paper measured the level of private benefit of control (.ab. PBC) that read 15.11 percent in China's listed companies. This figure is computed from samples of bulk transfer of shares that lead change of control right in listed companies. After then the paper empirically study the factors affecting PBC. The conclusions are listed as follow: PBC, company size and company's financial situation (ROE) are significant negative correlation; while PBC, the buyer's stake after the transaction and the ration of shares transfer in the transaction are significant positive correlation; PBC with scale of the other outstanding shares are negative correlation but not significant with financial leverage are positive correlation, but not significant. Finally, the corresponding recommendations are recommended.