Research On The Impact Of Capital Expropriations By The Large Shareholder To The Performance Of Listed Companies

Expropriation of the listed company's capital by major shareholders to their interests is a prevalent problem in Chinese capital market. This action has a severe impact on the listed company's routine operations and violates the interests of all parties concerned, and gradually becomes a tumor that obstructs the healthy development of the capital market. In August 2003,CSRC issued On Regulation of Capital Deals and Assurance between Listed Companies and Related Parties, proposing the expropriation of the listed company's capital by major shareholders and issuing some practical supervision measures on revising and preventing expropriation. In the following three years, many policies are issued. But till August 2006, 189 companies'capital is still expropriated by their major shareholders, and the amount of the expropriated capital reach 33,973 million. Under such circumstances, a research on the cause, the economic injury and possible solutions to the capital expropriation by major shareholders presents both theoretical and realistic meaning.This study is divided into five parts : Introduction, summary of capital expropriation, the sample selection and descriptive statistics, empirical testing, conclusions and recommendations. Conduct an overview of the occupier of funds of listed companies, including the definition of large shareholders accounting for funding, capital, means, and causes and so on. The third part and the fourth part are An Empirical Analysis released for the original occupation of data samples of the data from the third document "the announcement about the major shareholder of a listed company and non-operating circular funding occupied by its subsidiary companies " the major shareholder of the funds of the Shanghai Stock Exchange and the Shenzhen Securities Exchange in 2006, including a study on the proposition of the assumption ,the selection of the indicators and variable, the confirmation data and samples and the process and results of the analysis. The last part is a summary of the full text which will study and analyze the conclusions of this article applying to the issues of strengthen the protection of small and medium-sized shareholder's rights and interests, have put forward relevant measures for the healthy development of China's securities market services. At the same time, it will point out that the subject of further research directions in this article for future reference for further study.In this paper, the approaches to the study are qualitative analysis methods and empirical analysis. Qualitative analysis methods are based on existing theory and literature combined with the characteristics of occupying of funds by a major shareholder of listed companies in our country, furthermore to analysis the impact to the performance of listed companies by major shareholders accounted for funding. Empirical analysis firstly carries out a descriptive statistical analysis of the major shareholder of the occupier of funds and the performance of listed companies, leads to the result that the major shareholder of the funds is still a very serious occupation, there is a major shareholder funds of listed companies occupied the lower level of performance and even lead to nearly half of the company wear a hat ST. Then, I use the relevant analysis of the major shareholder of the funds on behalf of the company occupied and the relationship among the three indicators related to the level of performance. These three indicators are: rate of return on behalf of the total assets of profitability, growth rate of main business income on behalf of listed companies and the growth rate of assets and liabilities on behalf of solvency. The result shows that there are negative impacts of the major shareholder funds of listed companies occupying on the three areas. Finally, I set up regression models to research the significant negative impact of the funds occupying by the major shareholder on these three aspects.The results showed that the major shareholders of listed companies occupied capital of listed companies which has a severe impact: reducing the profitability of listed companies; impede a listed company's own development; reducing the solvency of listed companies. Continuously, the capital markets, listed companies and stakeholders are resulted in substantial economic harm. Aiming at the characteristics of the occupier of funds for the major shareholder, I bring forward the measures of prevention and settlement of large shareholders accounting for funding: Setting up an appropriate system of checking and balancing of the equity to form a reasonable share structure; improving corporate governance of listed companies; improving and perfecting the system of independent directors; strengthening the share reform of listed companies after a major shareholder of market conduct regulation.