Corporate Governance, Institutional Environment And The "hollowing Out" Of The Major Shareholders Of Chinese Listed Companies

This paper examines the moderating effects of the nature of the controlling shareholder on the relations between either other firm-level corporate governance attributes or regional-level institutional environment&the severity of controlling shareholder expropriation in Chinese publicly listed companies during the2008-2011period. The empirical analysis shows that the nature of the controlling shareholder, whether local governments or private entities, does moderate the effects of ownership structure, board characteristics®ional-level institutional environment on the severity of controlling shareholder expropriation. Ownership, marketization&board characterized by directors’working experience are only relevant to the severity of expropriation in private entities. In private entities, the severity of expropriation is greater in companies with lower ownership, higher marketization&board with more directors who has accounting or law working experience. Furthermore, the political experience of CEO or manager is positively associated with the severity of expropriation in local state-owned firms.This paper has both theoretical implications&political implications. The first theoretical implication is that scholars should pay more attention to the role of the nature of the controlling shareholder in studying corporate mechanism. Second, this paper uses a new measure of board characteristics&finds that the director’s working experience (accounting or law)&political experience explain the difference of expropriation, so later study can learn from the way of this measure.As for practical implications, the empirical result points out that private entities&local state-owned firms have different firm-level corporate mechanism, which confirms the supposed theory that private entities&local governments have different motives. Also, regional institutional environment has different constraints on private entities&local state-owned firms. Based on these, central government should not only insist on developing regional institutional environment&entitle CSRC to more authorities, but also work on the reform of administrative system to restrain expropriation of minority investors more effectively.