A Case Study Of Founding Shareholders And Institutional Investors' Competition For Corporate Control

In the current situation of Corporate Governance, the problem of struggling for the corporate control right between the founding shareholders and the institutional investors is seriously increasing. The founding shareholders attached to the enterprise control, and the institutional investors began to take great importance into and actively participated in the corporate governance, the conflicts between them not only intensified the capital market, but also led to lots of cases happened to compete for the controlling right. It has seized the great attention of domestic and foreign theorists from the practical or the real field. First of all, the contradiction between them really exists. Secondly, under the influence of institutional environment, the business way of competing for the controlling right mainly manifests in two aspects. On the one hand, in the formal institutional environment which mainly due to the legal environment, the shareholders increase the controlling power through equity capital controlling chain in directly or indirectly cross shareholding way to become the ultimate shareholders, then to get the ultimate control of enterprises. On the other hand, in the informal institutional environment, the paper draws into the concept of social capital, which refers to the interpersonal relationship network, to enlarge the analysis perspective of control theory. From the perspective of social capital, the shareholders take advantage of the intangible capital construction network and use the directly and indirectly social capital among the related stakeholders for the corporate control. At the same time, the paper introduces the legal system as an important regulatory factor to indicate the influence of corporate control. Through the review of related literature, this paper constructs the analysis framework, which under the regulatory role in the formal and informal institutional environment, established a theoretical analysis construction based on the double chain control of equity capital and social capital.In this paper, we take the NVC Lighting holding Ltd. as the main object of study, analyzing the three typical controlling right problems happened in the company. By analyzing the competing process between the NVC founder and the institutional investor, we make the in-depth analysis to know how we could use the dual capital control chain for enterprise control. Wu Changjiang, the founding shareholders of NVC, who kept financing from the capital market and led to lose the advantage of equity capital. Wu also take the advantage of stakeholders to combine the social capital network, strengthen the general meeting of shareholders, board of directors, managers, employees, suppliers and many other fields to defend the corporate controlling right. This paper supplements the legal system as the important influence of corporate controlling right, analyzing how shareholders adopt different methods through the affect the allocation of the control right, and to achieve the ultimate control of the enterprise. This paper is intended to point out the conflict between the founding shareholders and the institutional investors, and help the private enterprises of our country to defend the corporate control right founder provides methods and suggestions for improving corporate governance structure and protecting the interests of small investors.