Corporate Governance And Tunneling By Controlling Stockholder

In China, whatever the listed company or Unlisted Company, the conflicts between controlling stock-holders and minority stock-holders are obvious. Besides the element of national specific Ownership structure, the board of directors and the board of supervisors subject to the controlling stock-holders. The law protecting the minority stock-holders is still not enough. The supervision from external audit has not taken effect sufficiently. As well, The Market for Corporate Control is on the threshold. So it is necessary to transfer focus from the conflicts between the stock-holders and managers to the conflicts between stock-holders. La Porta et al(1999)said except minority countries such as Britain and USA, in most countries, the main agency problem of company is not prohibit manager from building his own empire, but limiting the controlling stock-holder to deprive of the minority stock-holders. So the topic which the paper analyze possesses rather good significance in theory and practice.Applying property rights economics, information economics and empirical approach, this paper attempts to analyze the Tunneling behavior of controlling shareholder of listed companies from the view of corporate governance. In Theory, the paper firstly proposes the corporate governance framework which impacts the tunneling behavior of controlling shareholder, then respectively expounds the impact degree of controlling shareholder tunneling of listed companies from the two respects of corporate governance which include internal management mechanism and external governance mechanisms on the basis of it. Finally, we deeply analyze the tunneling from three aspects of corporate governance, which include big shareholder governance and the board governance, the design of incentive contract, and the external governance including the legal protection of investors, the company control of the market, external audit and product market competition.In empirical aspect, this paper has selected 1239 effective samples of Chinese Listed Companies between 2003 and 2006 , aiming at testing the relationship between corporate governance factors and emptied the controlling shareholder. The main conclusions are : (1)the "only one big share" ownership structure has significantly strengthened the controlling shareholder's tunneling Behavior, however, the effect of power balance with shareholder structure was not obvious. (2) The effect of the board governance is limited, mainly show as there was not a clear effect on the supervision of the independent director of the controlling shareholder towards the tunneling behavior. The separation of the two control structure has not been reduced, and moreover, increased the controlling shareholder's tunneling behavior. (3)Because of the lack of law enforcement, investor protection laws do not truly reflect its value, but a higher level disclosure of information significantly inhibit the controlling shareholder of tunneling behavior.