Case Study On The Control Rights Competition Of NVC Lighting Technology Corporation

This paper selects a hit-debated case on control rights competition which occurred in NVC Company. The paper firstly studies on the common causes to and the nature of NVC Case, secondly analyzes different reasons for all the participants in control rights competition in terms of equity financing, shareholder activism, and founding shareholders’ peculiarit y,and thirdly analyzes the motivations and effects of other stakeholders, who also play an important role in the control rights competition.The paper has four majeure parts. The first part is on theories which define and describe control rights, private benefits from control rights, and control rights competition. The second part is to present the whole process of NVC Case and to describe the respective causes to its three episodes and their results. The third part is to analyze the case with the above theories and facts, which firstly analyzes the NVC Case’s natures, common causes and effects, and secondly analyzes different reasons for all the participants who took parts in the case. T he fourth part is conclusion and enlightenment, which from the viewpoint of corporate governance offers five suggestions to avoid control rights competition.From the NVC Case, we find that control rights competition is resulted from and affected by multiple elements as follow: first ly, equity financing weaken the founding shareholders’ control power over their corporate, which founds the base of control rights competition; secondly, with the separation between tit le right and control right, major shareholders and professional managers often invade the rights of the corporation, which results in conflicts of interest; thirdly, the founding shareho lders, who often lack of Spirit of Contract or own other defective characters, intensify the control rights competition; finally, stakeholders who are self-interest-oriented also plays an important role in control rights competit ion. In spite that control rights competition optimizes corporation governance to some degree, it always gives serious damage to corporations. Therefore, the paper suggests a balancing point of interests must be reached in order to avoid the occurrence of malignant control rights competition as well as to reach a win-win result.