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Empirical Research On Determinants Of Private Benefits Of Control

Posted on:2014-02-16Degree:MasterType:Thesis
Country:ChinaCandidate:J Q HuFull Text:PDF
GTID:2269330422951062Subject:Accounting
Abstract/Summary:PDF Full Text Request
Ownership concentration of listed companies is widespread in China, and controlling shareholders have high equity ratio, which help them to plunder the company’s controlling resources and grab private benefits of control (PBC). The severity of agency problems between controlling shareholders and minority shareholders outweighs the problems between shareholders and managers. How to suppress the PBC and how to protect the interests of minority shareholders become the focus of academic attention. In this paper, empirical methods are used to measures PBC, study its influencing factors and identify the constraints of PBC. According to the result, this paper provides some advice for the related departments.Based on the study of domestic and foreign scholars, this paper explained the formation of PBC from the e perspective of agency cost theory and the free-rider behavior theory, and compared the methods of measuring PBC, then analyzed the influencing factors of PBC from three angles which are the institutional environment, ownership structure and corporate governance structure, and used empirical research method to validate the assumptions.In the empirical research process, the paper selected equity trading events with the transfer of control from1997-2012in A-share listed companies in China as the research object, and used the improved BH model to measure the level of PBC in China. This empirical research selected PBC as the explained variable, and selected legalization index, degree of development of the intermediary market, government intervention, ownership concentration, equity balance degree, shareholding ratio of institutional investors, the proportion of tradable shares, the proportion of independent directors and executive compensation as the explanatory variable, then built the regression model to test the impact of various factors on PBC. Study finds that the degree of development of the institutional environment is not ideal, and legal regulation and government intervention cannot protect minority shareholders’ interests well. The intermediary market’s supervision is hard to realize because there is no punishment. The phenomenon of concentration of ownership is widely exsited in China, and the shareholding ratio of controlling shareholders does not affect PBC. The other shareholders and institutional investors can not carry out effective checks and balances on the controlling shareholders. There is no statistically significant correlation between the proportion of tradable shares and PBC. However, independent directors system has gradually improved, and independent directors play an active role in controlling PBC. The influence of senior management remuneration on PBC is weak. Finally, on the basis of empirical research, this paper proposed optimization governance recommendations to prevent major shareholders from grabing PBC.
Keywords/Search Tags:corporate governance, controlling shareholders, private benefit ofcontrol
PDF Full Text Request
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