Study On The Compensation Commitment Of Major Shareholders In Asset Purchase Of Private Placement

Regulations for major assets restructuring in the listed company is implemented on May 18, 2008. It stipulates for compensation commitment. When the major shareholder injects assets, it signed an explicit and feasible compensation agreement with the listed company later.Based on the study samples of listed companies whose private placement plan announced from May 18, 2008 to December 31, 2013 with compensation commitment, the comparable samples of listed companies whose private placement plan announced in the same period without compensation commitment, this article studies three important questions to evaluate protective effect of compensation commitment on minority shareholders’ interest by the method of event study and multiple regression analysis. They are signaling effect study on the compensation commitment of major shareholders、whether the companies perform the earnings management during the period of compensation commitment and the result of fulfillment when earnings forecast is substandard and the compensation commitment expires.The empirical results show that:(1) The compensation commitment of major shareholders has positive effect and can protect the interests of minority shareholders. The further study shows that share repurchase has bigger CAR than cash compensation; it can protect the interests of minority shareholders better. Regression analysis also proves these conclusions.(2) The compensation commitment of major shareholders, anthor motivation, stimulates enterprises to strengthen the degree of earnings management.There is negative management before the event, but the result of statistical analysis is not significant; there is negative management in the event year, and the result is significant at 5% level; but there is significant positive management after the event. The degree of earnings management is significant difference before and after the event by independent sample T test results.(3) The event study shows that the implementation of compensation by major shareholders does not play the fuction to protect the interests of minority shareholders.