The Analysis Of The Game Theory Between The Controlling Shareholders And The Creditors Based On The Conflict Of Interests

Under the background of equity concentration, the conflict of interests between the controlling shareholders and outside investors is one of the most important issues of corporate governance research. Many scholars conduct a large number of researches on the conflict of interest between controlling shareholder and minority shareholders. The controlling shareholders violate the interest of minority shareholders by the ways of directly occupying the fund of the listed company and unfair related party transactions, which can also threaten the safety of creditor’s funds. If the creditors found the controlling shareholders may do some damage to their funds, the creditors can take some actions, such as recovering funds in advance, improving the cost of using funds and never loaning funds to punish the controlling shareholders. We can find that there could be a game relationship between the controlling shareholders and the creditors.This paper analyzed the conflict of interests between the controlling shareholders and the creditors, and constituted the game relationship between them. After referring to the literature related to conflict of interests both at home and abroad, we design the payment function for the controlling shareholders, and prove that there is a game balance for the conflict of interest between the controlling shareholders and the creditors. On the basis, considering the characteristic of Chinese economy transition, we make the game model extension based on the analysis of the four factors, reformation of the shareholder structure, the degree of government intervention, the reputation system and the supervision policy. The creditors play an important part in restricting the controlling shareholders to violate the interest, as well as the four key factors. Through game theory analysis, we can clearly come to the following conclusion. Firstly, the study based on the game theory finds that the controlling shareholders and the creditors can come to game equilibrium if the supervision is effective. Secondly, share-trading reform can help to reduce the conflict interests between the controlling shareholders and the creditors. Thirdly, the government has great influence on the equilibrium outcome. Fourthly, a good reputation system will promote the long-term cooperative relations between the controlling shareholders and the creditors, which will be helpful for the game equilibrium. Finally, the improved regulatory policy would be helpful to eliminate the benefit expropriation interest motives of controlling shareholders fundamentally. Based on the special system background of China, the paper gives the related suggestions to improve the effectiveness of the creditors’corporate governance, the market economy system and the society trust system.