| Because of having concentrated stock rights, large shareholders have intense motivation to participate in and control the operation of Chinese listed companies. Under the system of large shareholders operating, they can not only share normol profit with medium-sized and small shareholders, but also make inroads into the benefits of medium-sized and small shareholders to get the benefits of control by their power when conflicting of interests arise. The agency problem between large shareholders and medium-sized and small shareholders has become the main object of governance in modern company. How to reduce the benefits of control to protect the benefits of medium-sized and small shareholders has become one of the difficulties urgently to be solved in China's capital market. As the core of internal governance structure, director board is an important part of modern company management. This paper tries to use empirical research method to reveal the influence of main characters of the director board on the benefits of control, so as to provide new evidence to strengthen the governance mechanism of director board and reduce the benefits of control.Firstly, by using principal-agent theory, information asymmetry theory and the theory of incomplete property income, this paper analyses the theoretical basis of the benefits of control. Secondly, it theoretically analyzed the influence of characters of board on the benefits of control. Thirdly, based on the annual data during 2005-2009 in China A-share listed companies, this paper empirically tested the influence of five main characteristics of director board on the benefits of control. Empirical results show that: the size of the board and the frequency of meeting are negatively related to the benefits of control, duality of general manager and chairman of director board is concurrently with the benefits of control; the proportion of the independent directors and the stock controlled by the board are negatively related to the benefits of control, but it doesn't pass the empirical tests, this is because the effectiveness of independent directors in Chinese listed companies is not very well operated and the proportion of the shares hold by the board is low. Finally, according to the theoretical and empirical conclusions, this paper makes some suggestions including perfecting the system of independent directors, improving the frequency and efficiency of activity and encouraging to improve the proportion of stocks controlled by the directors to reduce the benefits of control. |
