Interests Of Minority Shareholders Of Listed Companies, An Effective Proxy Mechanism,

The traditional corporate governance theory is based the dispersed ownership has been trying to address the agency problem beween stockholders and managers. With the strengthening of normative research and positive research, many scholars found that most enterprises'ownership are not highly dispersed but quite concentrated in the world,therefore the focus of the agency problem , which is caused by the seperation between ownership ans control,turns from interest conflicts beween stockholders and managers to those beween controlling stockholders and minority stockholders , which is the focus of the agency problem .In such principal-agent relations, controlling shareholders own information have become agents, they have more benefits that motive them to be supervision in the company. In the other hand ,small shareholders have little information become clients, normative and positive studies show that controlling shareholders is conducive to resolve the agency problems of owners and operators , but it give rise to encroach on minority stockholders' interests.In the history of China's securities market for more than ten years, the cases that controlling stockholders expropriate minority stockholders' interests by trading insider, manipulating stock market, and other means of spreading false information emerge in large numbers. In the view of Rationality ,the explanation of the cases that small shareholders cannot protect their own rights and interests by the market and legal means when they are expropriated by large shareholders and still participate in the capital market is speculation, and even way of colluding insider information to obtain the Excess interests. Therefore, the small shareholders cannot tolerate this unfair and has been staying because of this frequent unfair trading, which has brought the capital market confusion. Those helpless minority shareholders lost confidence in the capital market, had to withdraw from the market, lead to the capital market shrink. Therefore, a deep study of the agency problem beween controlling stockholders and minority stockholders is not only the problem of corporate governance, but also the problem Related to the healthy growth of the capital market, has the important theoretical and practical significance.Many scholars also puts forward the countermeasures and suggestions to protect minority shareholders' interests, but we believe the effective solution to the problem must be based on comprehensive analysis and understanding of the problem .based on the above opinion,this paper Profoundly analyze the agency relation beween controlling stockholders and minority stockholders, Research the role they play in corporate governance .the thesis explore the effective agency mechanism to protect small shareholders' rights and interests from the points of views of corporate goveraance,puts forward Feasible Solutions to Solve the agency problem beween controlling stockholders and minority stockholders. It should be pointed out, the effective agency mechanism referred is not to say that the agency relations between large shareholders and small shareholders should be abolished, to reconsider the agents of small shareholders who never conflict with the cliets, but in such circumstances of the existing agency pattern, through optimizing other mechanisms of corporate governance to improve the agency system and make it more effective.In accordance with the principal-agent theory, this paper first profoundly analyze the invisible relation beween controlling stockholders and minor stockholders,explain the Mechanism that major shareholders in listed companies expropriate small shareholders 'interests in the process of Oversight operators on behalf of all shareholders, and comprehensively analyze the internal and external reasons of the interest Conflict between large and small shareholders:Institutional arrangements, and lack of supervision make major shareholders' control expanse and small shareholders discriminated in the distribution of power, which create a viable space for major shareholders to Occupate the small shareholders 'interests, the majority shareholder and the operator's collusion make major shareholders' motivation to grab benefits of control become a reality. Secondly, In the period of 2003—2004, 93 cases concerning the transaction of state-owned share and legal share have occurred in the two stock markets of Shanghai and Shenzhen. We take these cases as our research effect samples,from the perspective of the positive studies measure the invalidity of agency relations between large shareholders and small shareholders, The authors then conduct the multi-variable linear regression analysis on the factors influencing benefits of control. Finally, based on the above normative and positive analysis ,the paper puts forward the optimal ownership structure and oversight mechanisms to improve small shareholders' effective mechanism from the perspective of the internal governance of listed companies. Several majority shareholders shape a control union that prevent any individual shareholder to make the decision controlling the enterprise and achieve an equilibrium between the shareholders'right through Internal contain, at the same time, cope with the cumulative voting, voting right agency and voting right trust, the shareholders'agency lawsuit, senior partners'fiduciary obligation advocated by scholars to limit the expansion of majority shareholders'control and protect small shareholders' necessary remaining control, to achieve the rational allocation and effective balances between all shareholders'right. On the other hand, through Constructing the Association of independent directors, make independent directors on behalf of minority shareholders play an active role in the process of supervising large shareholders, the board of directors and managers, curb the majority shareholder and the operator's collusion motivation to grab control benefits, and ultimately improve the defects of the principal-agent relations between large shareholders and small shareholders , making the agency mechanism of minority shareholders' interests more effective.