The Controlling Shareholders Benefit Expropriation Mode, Investor Protection And Enterprise Performance

Now available studies suggest that equity concentration commonly exists in Chinese listed companies. Therefore, the conflict of interest between the major shareholders and the minor shareholders becomes the core of corporate governance in modern era. Since Liu Shaojia, Sun Pei and Liu Naiquan (2003) apply the ultimate cybernetics to probe into governance structures of Chinese companies at home for the first time, ultimate controlling shareholders have taken advantages of their excess control right to grab control private income and consequently cause damages to companies'and minor shareholders'interests. And such an issue has become the studied focus and one of problems to solve in the academic community.How do ultimate controlling shareholders grab control private income? What are the characteristics? What influences on corporate performances? Whether the current investor protection policies effectively restrain the occupation behaviors of controlling shareholders or not? Such questions provide a favorable research opportunity for this article.According to data of A-stock listed companies in Shanghai and Shenzheng Stock Exchange during 2008 and 2009, in this article, I, starting from the separation of the ultimate controlling shareholders'control right and the cash flow right, have inspected the influences of the separation of control right and cash flow right on the two occupation behaviors, including capital occupation and excessive guarantee, of ultimate controlling shareholders. The studies suggest that the separating degree of the control right and the cash flow right is positively correlative with the capital occupation and the excessive guarantee. And this result proves that the separation of control right and cash flow right is the advance feature of controlling shareholders occupying interests of the company and the minor shareholders. Meanwhile, this article also suggests that nature differences of the ultimate controlling shareholders'property rights have little influences on this correlation. That is to say, under the precondition of the separation of control right and cash flow right, the capital occupation and excessive guarantee are possibly the common means for controlling shareholders of different property right natures to grab private incomes.In this article I have tested experimentally such an issue further and have investigated the relations of the property right nature and the capital occupation and excessive guarantee. The investigation suggests that behaviors of the capital occupation and the excessive guarantee in central government controlling companies are obviously fewer than that in non-central government controlling companies. Meanwhile, in the field of capital occupation, because local governments have the administrative rights which ordinary ultimate controlling persons have not, capital occupation levels of the local governments, which are trying to grab control private incomes, are obviously higher than that of private companies. However, in terms of the excessive guarantee, there are few differences between them.Secondly, considering that ultimate controlling persons of different property rights would conduct differently in grabbing the control private income by the means of capital occupation and excessive guarantee, etc, in this article I have inspected influences of controlling shareholders'capital occupation and excessive guarantee on the company's performances. And the research suggests that the company's performances are negatively correlative with the controlling shareholders'capital occupation and excessive guarantee. That is to say, the capital occupation and the excessive guarantee have negative influences on the company's performances. Meanwhile, the research also proves that the influences of different property right natures of ultimate controlling shareholders on the company's performances significantly vary. On average, the private companies'performances are the best; the local government controlling companies'performances are middle and the central government controlling companies'performances are the worst.At last, on basis of above researches, in this article I have also inspected influences of investor protection on the grabbing behaviors of controlling shareholders, from the auditor's point of view since the auditor is the medium of information protection. The study suggests that considering the auditing opinions of auditors as the substitute variable, the investor protection, which meanwhile restrains the occupation behaviors of controlling shareholders to some extent, is positively correlative with the company's performances. That means, although current relevant laws and regulations on investor protection has been not perfect, the auditors, which are the information medium as the last checkpoint of investor protection, still play their due roles of protection. And this also indirectly suggests that the released auditing opinions of auditors are still effective although many factors would influence the released auditing opinions of the auditors.At the end of this article, I have presented relevant policy suggestions based on the study results. In current corporation governance structures of high equity concentration, to protect relevant interests of investors has become one of the main contents of corporate governance studies. In this article, it is believed that investor protection is a generalized concept. In order to ensure that the relevant interests of investors are not occupied, on the one hand, we shall reinforce the institutional construction of our state laws and regulations, perfect our law and regulation system as well as our corporate governance structures so as to create good environments for corporate governance; on the other hand, we shall strengthen our investor education, increase our self-protection consciousness so as to perfect the investor self-protection system.