A Study On The Major Shareholder's Behavior And The Performance Of Seasoned Equity Offerings

Berle and Means(1932)pointed out that one of the most important characters of modern corporations is the ownership and the control right's separation,this view accelerated the substitute problem's development between the shareholder and the manager. La Porta(1999)expressed his doubt on this view's universality,he found that the core substitute problem of corporations is between major shareholders and the minority ones. This dissertation chooses the substitute problem between major shareholders and the minority ones as a window to study the performance of Seasoned Equity Offerings(SEO).The main contents of this dissertation are as follows:Besides the introduction,this dissertation includes five chapters.Chater2 is the basic theory and review of literature. The contents of this dissertation are based on three classical theories,they are Principal-Agent Theory,Outside Theory and Economic profit Theory. Review of literature includes the performance of SEO,major shareholders and their behavior,the EVA theory,basing on this the dissertation gives the definitions that will be used.Chaper3 demonstrates the performance of our country's SEO, using EVA to weigh it, finding the performance is very bad. The finding is consistent with past studies.Chaper4 analyzes theory effect of the major shareholder's behavior on the performance of SEO,containing the major shareholder's SEO preference,profit margin and tunneling. These factors all lead to bad performance of SEO.Chapter5 uses regress method to validate the outside and inside corporation governance's validity in our country,finding the larger rate the major shareholder hold,the worse the performance of SEO. And the validity of outside and inside corporation governance is disappointing.Chaper6 gives some advice to improve the performance of our country's SEO. Optimizing the corporation governance structure is the inner basic,and adjusting the outside environment is also an important approach.The main contributions of this dissertation are as follows:Firstly,this dissertation offers evidence to further studies on performance of SEO in our country, trying to answer these problems:What about the performance of our country's SEO? How major shareholders obtain private benefit? How is the outside and inside corporation governance's validity in our country? What can we do to control the major shareholder's tunneling?Secondly,this paper uses EVA to weigh the performance of SEO. EVA is more scientific than accounting rate because it takes the opportunity cost into consideration and it's the real return to shareholders.Thirdly,this paper can help to protect the minority shareholders' rights. Now it is common that the major shareholder infracting minority shareholders' rights,SEO becomes a main path for the major shareholder's tunneling. This dissertation will research how to control this infraction and how to protect the minority shareholders'rights.Lastly,this dissertation can spread the EVA idea. Although EVA is now being respected by many academicians,but very few companies are using it. This dissertation tries to bring EVA to the evaluation of efficiency in the use of funds.