Impact On The Effects Of Minority Investor Protection By The Ownership Structure Of Family Companies

Minority investors are the main body of China’s securities market and are having adirect impact on the long-term economic development, so the protection issue is the focusof the market at all times. The family business has a prominent contribution to thedevelopment of China’s economic boom, which is called China’s economic “invisibleengine”. Especially in recent years, the family business which applies for listing is showinga potential blowout, so family listed companies have also become a hot topic in the current.Family listed, however, have a high concentration and “pyramid” type of equity structure.In connection with the allocation of shareholder interests, associated transaction, theembezzlement, information disclosure, governance structure and agency problems areemerging with the family listed companies increased. These problems are likely to tunnelthe interests of minority investors. Therefore, studying family listed companies’ equitystructure for protection of minority investors is necessary.In this paper, starting form studying the equity structure of family listed companies toprotect the interests of minority investors. Demonstration of the family listed companiesinfringe on the interests of minority investors, in the frame of improving and strengtheningthe mechanisms to protect minority shareholders. The paper first reviews the theory andresearch of investors’ protection and the realistic background of the family listedcompanies infringe on minority investors, proposing research assumptions on the basis ofthese theories. We choose372family listed companies which are qualified and datacompleted in private listed companies from2009to2011. In order to do descriptiveanalysis, correlation analysis and regression analysis which seek the influencing factors offamily listed companies in different ownership structure for protection of minorityinvestors with its three-year cross-sectional data. The empirical results show that: Minorityinvestors have worse protection because of the higher degree of ownership concentration infamily listed companies. Balance of the other major shareholders has a significant role inthe protection of minority investors. With the increase in the equity ratio of the second tothe tenth largest shareholders, it’s more inclined to protect minority investors. It is notconducive to protect minority investors if the company has the greater separation of control and ownership and the longer chain length of equity control. At last, based on the results,combined with the current reality background and put forward the corresponding policyrecommendations, including optimize the shareholding structure, strengthen thesupervision of the company, improving the information disclosure system and theself-awareness of the rights of minority investors.