The Causes And Economic Consequences Of Control Right Contest

In recent years, the control right contest in our country has occurred frequently, which has attracted the attention of scholars both at home and abroad. The separation of ownership and control in modern companies prone to principal-agent problems, and because of the ownership structure of listed companies in our country is relatively concentrated, so it is more likely to produce a second class of principal-agent problems, which means that agency problems between controlling shareholders and minority shareholders are growing. In the early time, the equity liquidity of our country’s capital market is poor and all aspects of the conditions are not mature enough. Thus, in 2005, China’s capital market has been split share structure reform. Equity division reform affects the ownership structure of listed companies, it activates the vitality of capital markets, but the conflict of interest between controlling shareholders and minority shareholders for a long time can not solve immediately, so competition for control over events occur frequently. Research on the causes and economic consequences of control right contest can provide a reference value for balancing ownership structure between state-owned shareholders and private shareholders, enhancing the efficiency of corporate governance and promoting the development of the equity division reform.This paper is divided into six parts, the first part is the description of the background and significance of research, then I combine and summarize the literature and theoretical foundation. Taken Wushang group as an example, I sort out the specific process of control right contest in chronological order, and analyze the cause and economic consequences of control right contest between state-owned shareholders and private shareholders with the combination of the principal-agent theory, stakeholder theory and control theory. It is found that the private of interest of control, the different nature of strategy, the seek for ownership balancing and institutional background can give rise to control right contest. On the one hand, control right contest will encroach the interests of minority shareholders, on the other hand, it will change the company’s ownership structure and thus affect the efficiency of corporate governance. Meanwhile, in the process of control right contest, different role orientations and behaviors between state-owned shareholders and private shareholders lead to different market reactions, and the market performs better after state-owned shareholders win the control right. Finally, some suggestions are put forward to improve external system environment and internal corporate governance.