The Research Of Large Shareholder Using Group Finance Company To Occupy

The expropriation of large shareholders is a hot issue in academic research inrecent years. In order to obtain private benefits of control, large shareholders will takelegal or illegal means to occupy, and thus damage the interests of minorityshareholders. As the Group’s internal non-bank financial institutions, financecompanies are mainly responsible for providing services for the financing of Groupmembers, help strengthen the Group’s centralized management of funds and improvethe efficiency in using resources. Although the Group’s finance companies promotethe economic development of the entire group companies, inevitably there are someproblems. Based on the combined research of Group’s financial company and largeshareholders’ occupation, this paper aims at researching whether the largeshareholders will make use of finance companies to occupy, how to prevent it, andprotecting the interests of minority shareholders.Firstly, based on basic theoretical analysis of the principal-agent theory, thispaper analyzed that the large shareholders will make use of the advantages of controlto obtain private benefits and damage the interests of minority shareholders in manyways. Then, by establishing a model based on internal loans of Group financecompany, it finds that the large shareholders are tend to acquire private interest viathe finance company. Taking group holdings of listed companies from2007-2011assamples for empirical testing, it proves that large shareholders actually take financecompany as a tool to access benefits and damage the interests of minorityshareholders. Based on that, taking group holdings of listed companies which runningwith a finance company as samples, the empirical analysis results shows that theshareholding ratio of listed companies in finance company, the quality of audition andthe scale of the supervisor board are obviously negatively correlated with the degreeof large shareholders’ occupancy, but the proportion of ownership, the proportion ofindependent directors have no significant correlation with the degree of largeshareholders’ occupancy. Finally, for the fact that big shareholders obtain illegalbenefits via finance company, the paper put forward some recommendations to protectthe rights and interests of minority shareholders.