Research Of The Impact On Corporate Value Made By Small Investors Protection

Since China’s securities market established in1991, it has developed for more than20years.In the past20years, it has undergone enormous changes. By the end of2010. The number of listed company in Shanghai and Shenzhen stock market has developed from14to2063, the total number of equity shares is3.3273trillion and the total market capitalization is26.54trillion, which is2435times that of1991’s Development of securities market plays an important part in promoting enterprise reform, awaking the awareness of residents to invest, expanding financing channels for enterprises and optimizing the allocation of social resources. However, because of only20years’time for the construction of China’s capital market, the legal system remains imperfect, the stock market frequently has problems. The crux of the problem is concentrated in the largest shareholder of encroachment on the interests of minority shareholders, the problem is different from the first class of agency problems between traditional managers and owners, it belongs to the second category of agency problems.The existence of the agency problem between large shareholders and minority shareholders played a strong inhibitory effect on the long-term development of China’s listed companies and securities markets, For listed companies, the absence of small and medium investor protection has been a bad influence. In recent years, small and medium investors in the capital market have conflicting attitude to the refinancing behavior of listed companies In the long term, this effect will reduce the value of the company. For the securities market, the deprivation of the largest shareholder makes small and medium investors gradually lost confidence, but also inhibited the entry of the company’s outside investors, If this case continues long, it will ultimately affect the development of securities markets, the downturn of stock market will also affect the prospects for the development of the listed company in the stock market. Therefore, the problem of protection for the investor is increasingly prominent. How to enhance the protection of small investors, domestic and foreign scholars have been unremitting efforts. The legal theory thought that the law is the external mechanisms of investor protection, legal investor protection plays an important role, also found that the law is an alternative mechanism of investor protection; corporate governance theory thought that the good mechanisms, such as equity moderate concentration equity checks and balances, an independent director system, etc., would be small and medium investors to form a better protective effect.If the company lacks the protection of investors, agency costs increase, medium and small investors interests are jeopardized, investors will choose to vote with their feet, eventually leading to the reduction of the value of the company. If the interests of small investors are protected, small investors will be a positive commitment to corporate governance, enhance the level of corporate governance, reduce agency costs, thus increasing the value of the company. Domestic and foreign studies have shown that investor protection can increase the value of the companyFace the reality of China’s securities market, the number of institutional investors account for only a small percentage of small and medium investors accounted for the vast majority of the investors, they become an important participation of the main stock market will promote China’s securities. Protection of small investors is urgent and important, the study of small and medium-sized investors have a very important practical significance. The protection of the interests of investors is the research focus of institutional economics, financial behavior theory, the focus of various studies are small and medium investors, small and medium investor protection also has a strong theoretical significance.This article has the several innovates as following: One:Investor protection index system built in this article are based on small and medium investors point of view, summarized by indicators of existing research, and select a new meaningful variables independent thinking, trying to build index system more focused. TWO:This paper is the relationship between small and medium investor protection and corporate value, the control time and industry variables to ensure the reasonableness of the conclusions. The study is divided into six parts.The first part is the introduction, first described the research background paper to study the problem; and then describes the significance of the thesis, research contents and methods; finally summed up the innovation and contribution of the paper.The second part is the review of the Literature. The first section reviews the research on the relationship between the two at home and abroad. Section Ⅱ reviews the measurable results of the small investor protection index. inherent properties of the medium and small investors, build investor protection index system.The third part is theoretical explanations. The theoretical part introduces the theory of small and medium investors, and then introduced the company’s value theory, and finally explores the investor protection impact mechanism on firm value.The fourth part will build small and medium investors index system. In this paper, medium and small investors as a starting point, select the6indicators specific to small and medium investors to design small and medium investors index system, small and medium investor protection index of the papers listed companies, using an independent T-test results to verify the rationality of the index system.The fifth part is the empirical part. The first section asked the assumptions of this article, that is, the value of small and medium level of investor protection and the company is a positive correlation between Section2Select the empirical sample, Section3design variables, to replace the integrated value of the firm value variable to the principal component analysis, the fourth section to build an empirical model of the paper, section five of descriptive statistics of the data, and section six for the correlation analysis of the model variables, the VIF of each variable are under2the model does not exist a serious multicollinearity problem. Section VII contains the empirical results.The sixed part concludes the analysis and recommendations. Section one summarize the conclusions of this paper. Section two of the policy recommendations of this article. Section three for the limitations of this study.Continue to verify the reality of foreign scholars on the outcome of the relationship between the two. According to previous research, that:the current reality in China, the enhancement of investor protection has a significant effect.