The Split Share Structure. Era Of Equity Financing Accounting Rent-seeking Empirical Research

Split share structure is a kind of special institution arrangement in the early period of China's capital market evolution. It has devastated the mutural benefits between the tradable and the non-tradable shareholders, and also the pricing system of the market. It has greatly drived Chinese listed companies to make earning management, implement accounting fraud, and issue excessive new shares so as to wrangle as much money as possible. Non-tradable share reform started in April 2005 changed the irrational institution arrangement at all. On June 19^th 2006, CAMC Engeeneering as the first flotation company in the concept of full circulation was listed in Shengzhen Stock Exchange, which symbolized the coming of post non-tradable share reform era. In the new epoch, the institution environment has dramaticly varied. The conception of the market, the pricing system, the earning module, investor structure and subject act in china's capital market have all greatly changed. Rent seeking activites with close dependence on institution environment have changed as well.The paper bases itself on the particular institution environment in the new era, that there has been expectation of full circulation but it is not implemented in the real world. Firstly, the paper recalls the rent-seeking theory, new institutional economics, and the principal-agent theory to prepare bedrock for the next analysis. Secondly, the paper analyzes the impact of corporate governance structure, Company Law, Securities law, Accounting Standandards for Enterprises, and such law alike on accounting rent-seeking. Thirdly, the paper takes samples of the listed companies that make IPO, public offering, and rights offering in 2007, and does empirical research to analyze the relationship between the accounting rents of equitiy financing and corporate governance indexes, such as the independent director ratio and major stockholders' holding ratio, as well as changes of current accounts in the new era.The result shows that corporate governance structure, Securities law, Accounting Standandards for Enterprises, and such law alike provide accounting rent-seeking with institution environment, and listed companies still have keen incentives to make accounting rent-seeking. The empirical research shows that major shareholders and small and medium shareholders have find mutural benefits, and major shareholders may promote equitiy financing for all thd stockholders including the small and medium ones, that independent directors don't play a significant role in inhibiting accounting rent-seeking and independent director system needs to be improved, that fund and institutional investors holding as many shares as possible does good to all the stockholders, and it is wise to encourage fund and institutional investors to invest precious cash in listed companies and put them under rigorous supervision, and that adjusting current accounts is also one of main avenues of public offering accounting rent-seeking. According to the result of the paper, China's government and its affiliations should take constant measures to revise and consummate fundamental laws such as Company Law, Securities law, the new Accounting Standandards for Enterprises, that China's listed companies should tries their best to optimize their corporate governance structure and strengthen their social responsibility, and that all the inevestors, especially the the small and medium ones, should pay much attention to their rights in the listed companies and strenghen the abilities to evaluate corporate value.