The Study Of The Shareholding Structure And Unfair Related Party Transaction

The core of modern enterprise governing mechanism is to protect related interests of the minority shareholders. The modern enterprise governing mechanism pay more and more attention to the interests of minority shareholders. But in our country, it has little effect which results from the special shareholding structure.The stock market in our country was created for solving the national enterprises' problems, and most of the listed companies are derived from the original national enterprises. As China's economy's development, the large shareholder's overwhelming position gives them an opportunity to gain personal benefits. The controlling insider took advantage of the unfair related party transactions, which decreased the listed company's value, to tunnel benefits.The reason for unfair related party transactions are the default of the enterprise governing mechanism and the supervising system .It is special that the situation of the shareholding structure of domestic listed companies. Most of the listed companies are the large shareholder's companies in fact. So the phenomenon of controlling insider is serious. The fairness of related party transactions depends on the benefits of large shareholders. Because of the scarcity of balance in benefits, many unfair related party transactions occur by which the large shareholder tunnel benefits.With the reform of shareholding structure, the situation will get better, which will not so serious. Whether the unfair related party transactions has something to do with shareholding structure, what kinds of role the ownership structure plays in the unfair related party transactions, and how to regulate unfair related party transactions are the issues we are studying.There are four parts in my paper.Chapter one: the present situation of the shareholding structure of domestic listed companies and the unfair related party transactions . This part is the foundation of the study, which firstly introduces shareholding structure of the domestic listed companies. Secondly, we have a view of related party transaction.Chapter two: the analysis of shareholding structure and unfair related party transaction in China. This chapter describes the key theory in this paper and it impacts these empirical analyses. At first, it analyzes the effect mechanism of the shareholding structure and unfair related party transaction. There are four kinds of shareholding structure, one of which is the best. Secondly, it puts up the mode of shareholding structure and unfair related party transaction. The state-own shareholder has great motivations to take the unfair related party transaction. Then it makes a full analysis of the relationships of the shareholding structure and unfair related party transaction in our country. At last , it puts up the tendency of the development.Chapter three: the Empirical Study and the conclusion. Controlling shareholders choose certain ownership structure and unfair related party transaction's mode. We put up five hypotheses which will use data to prove. At last we prove them. There are some relationships between the controlling shareholders.Chapter four: the countermeasures of regulating unfair related party transaction. First, reasonable shareholding structure can make different kinds of shareholders have the same goal with listed company. From the perspective of shareholding balance, we need to reduce the state-own share and have several shareholders whose share is similar, which will reduce the unfair related party transaction. We need to improve the enterprise governing mechanism and intensify supervision. On the other hand, we can make more serious laws of related party transaction.The paper has the following characteristics:1 The paper changes the studying angle on unfair related party transaction. There are many aspects available for studying. My paper chooses to analyze this issue on the basis of shareholding structure. It combines unfair related party transaction with internal governance on the assumption of maximum benefits of controlling shareholders.2 The paper has a clear logical structure. As the dominator in the unfair related party transaction, the controlling shareholders are surely the key to solve the problem. On such assumption, the domination effect will lead to unfair related party transaction, and the structure effect will create different kinds of conditions to choose unfair related party transaction's mode. The purpose of changing the studying angle is to change the way to regulate unfair related party transaction, and to protect the investors and improve the efficiency of corporate governance.3 The study method of this paper is normative and empirical study. We use data of 2006 from the industry listed companies to testify our hypothesis. From the perspective of shareholding balance, we need to reduce the state-own share and have several shareholders whose share is similar, which will reduce the unfair related party transaction. Meanwhile, it is not good the scattered shareholding structure in our country.