The Influence Of Positive Behavior Of Shareholders On Corporate Governance

Corporate governance has a very important feature:the separation of company’s ownership and control, which may leads to the agency costs between the management and the company shareholders. Therefore, a relatively common practice in developed countries is that shareholder activism, with the necessary supervision of management to enhance corporates’performance. Reducing agency costs is critical, although whether shareholder activism has positive effect on the behavior of the corporate governance performance is still on debating because of lacking direct evidence. But most of the empirical studies have proved that shareholder activism can enhance the companies’ performance. As improving corporate governance in China is becoming increasingly important, whether shareholder activism can play a positive role in the enhancement of corporate governance in China? Analyzing how shareholder activism makes impact on corporate governance in China is becoming an increasingly important issue.Shareholder activism is difficult to measure directly. With institutional investors becoming increasingly important in the west capital markets, so in the previous studies, the scholars used mainly institutional investors’stake as an indirect indicator of shareholder activism. But taking into account the actual situation of our country, the use of institutional investors stake as a measure of shareholder activism may not so appropriate, therefore, choose a more direct and more suitable indicator becomes an important premise of the study. On this basis, whether shareholders activism in China enhanced the performance of the listed companies? If it is, whether market made a positive response for this? If not, why?Based on the concluding of shareholder activism’rise and development in developed countries, this article introduces the main research about shareholder activism. Then the article analyzed corporate governance status in China, and combined the data and analysis, indicates that the attendance rate of the annual meeting is a good direct indicator of shareholder activism. Meanwhile, combined data of the2007-2010listed companies in China, the article discussed whether shareholder activism can improve corporate performance from the aspects of long-term operating performance and short-term market reaction.In the study, we found that the attendance rate of annual meeting is a good indicator of shareholder activism. And no matter the evaluation of company performance is based on single financial indicator or composite indicators, the performance of companies with high shareholder enthusiasm on corporate governance always better than the low group in the year before, the year and the next year. Besides, the stock of companies with high shareholder activism makes1.733%cumulative abnormal return within20trading days after the annual meeting. Even after considering the endogenous, shareholders activism still produce a significant positive impact on corporate performance, and investors also prefer to hold stocks of companies with strong profitability. The first chapter is a guide of the article and the second is about the relative researches both domestic and oversea. The third chapter is about the reality of governance in China listed company, and the last chapter is a conclusion.