The Influence Of Shareholding Structure Of Listed Company In Pharmaceutical Industry On Rights And Interests Of Minority Shareholders

The protection of rights and interests of minority shareholders always attracts much attention in the development of securities market in China. The fact that dualistic shareholding structure which has tradable shares and non-tradable shares can be seen in Chinese stocks market before the reform of non-tradable shares, consequently resulting in a phenomenon that non-tradable shareholders who have more stocks gain additional benefits from listed company by taking advantages of their controlling stake or dominant position and thereby misappropriate the rights and interests of minority shareholders. To relieve the contradiction between majority shareholders and minority shareholders, the reform of non-tradable shares was implemented and the non-tradable stocks began to turn into tradable stocks which can circulate in secondary market in 2005. Therefore dualistic shareholding structure transform into fully-tradable shareholding structure. However, the behaviors of misappropriating the equity of minority shareholders carried out by majority shareholders through modified pattern are still presented in new economic situation.Sufficient literatures stated the research about protection of minority shareholders from the points of embezzling way of large shareholders and shareholding structure. Considering the rights and interests of minority shareholder is difficult to measure, very few domestic studies directly analyze the relationship between shareholding structure and the protection of the minority shareholders. They mainly analyze and evaluate the level of protection of minority shareholders indirectly by corporate performance. In the previous study, most researchers focused on the embezzling way of large shareholders to study the protection of minority shareholders. However, with the shortage of evaluating the level of protection of minority shareholders through the corporate performance in an indirect way, the corporate performance may not be available to represent the protected level of rights and interests. Consequently, it is necessary to study the protection of rights and interests of minority shareholders by utilizing shareholding structure directly in the situation that researches about this are not very common. Furthermore, considering that the private benefits of control can measure the level of protection of minority shareholders after an abundant literatures-reading, the study about relationship between shareholding structure and minority shareholders is expected to transform to the connection between shareholding structure and private benefits of control.In this research, the data of listed companies in pharmaceuticals industry during 2013-2015 were selected as study samples. Three different regression models were set up to study the rights and interests of minority shareholders using three different shareholding structures described by shareholding concentration, equity restriction ratio and proportion of the shareholding of institutional investors respectively. The econometric model of mentioned rights and interests of minority shareholders above was modified based on the BH econometric model with the characteristics of fully-tradable share market in China. The results of empirical study displayed that shareholding concentration has a negative correlation with rights and interests protection of minority shareholders, shareholding concentration has positive correlation with rights and interests protection of minority shareholders and shareholding of institutional investors has positive influence on the rights and interests protection of minority shareholders.In conclusion, comments and suggestions about improvement of protective system of minority shareholders were provided based on the results of empirical study: firstly, keeping an appropriate shareholding concentration; secondly, increasing the equity restriction ratio; thirdly, introducing more institutional investors; lastly, expanding the size of listed company.