Ownership Structure, The Controlling Shareholder Of The Transfer Of Benefits And Business Value

Our securities market and listed companies grew quickly with the fast economic development since Chinese reform and opening, which improved the capital market and provided strong fund support for our economy. However, there are still problems with the governance structure especially the shareholding structure of the listed companies, mainly reflected as the highly-concentrated shareholding structure even with one dominant shareholder. In the context of equity division and weak protection of investors, the phenomenon is common that the dominant shareholders would transfer the resources from the listed companies and undermine the benefits of small shareholders. The equity division reform beginning in 2005 was a turning point in the develop of Chinese securities market.The study firstly sums up the foreign and domestic research about shareholding structure, tunneling and firm value. And then we analyze the characteristics of the shareholder structure in Chinese listed companies, and analyze the deep institutional reasons from the aspect of the development of Chinese capital market and listed companies. Thereafter we explore the main ways used by the controlling shareholders to tunneling through as well. Afterwards we develop a theoretical model based on La Porta et al. (2002)'s analysis and gain the relationship among the shareholding structure, tunneling and firm value. In the empirical analysis, we gather the unbalanced panel data of 7,081 Chinese listed companies during 2005-2009, and establish the empirical model with the other receivables as the measure of tunneling. The main conclusions are that as the ORECTA is lowering through 2005-2009, the tunneling of controlling shareholders is improving. When the stake position of the controlling shareholders is low, the tunneling was more severe. But when the stake position is high enough, the tunneling level is weakening as the shareholding ratio increases since the controlling shareholders bear more losses. Last but not least, tunneling is negatively related with the firm value measured by Tobin Q, which means the tunneling would decrease the firm value. This conclusion is different with the previous research and reflects the growing transparency and maturity of Chinese securities market along with the reform and institutional standardization recent years. Based on the conclusions, we come up with certain policy recommendation. The main contribution of the study is the empirical analysis with the data of 7081 Chinese listed companies during 2005-2009, which to a certain extent supplements the existing research focus on the tine before 2005. In the empirical analysis we use the other receivables as the measure of tunneling and extend the views of angle. And the study grasps the development of Chinese capital market through comparison analysis.