Research On The Influence Of Non-Controlling Shareholder's Directors On Over-Investment

Overinvestment and problems in dividend distribution are generally considered as the result of the separation of ownership and control,which is a common agency problem.The board structure and its governance effect play an important role in relieving the agency problem,which has attracted so many scholars' attention.The expression form of the board structure is a composition of internal directors and outside directors in the board of directors.Previous studies on external directors focused on independent directors,there is little attention to the role of directors stationed by the non-controlling shareholders in corporate governance.From a new perspective,this paper studies the impact of the non-controlling shareholder's directors on the agency costs of listed manufacturing companies in china.To investigate whether the non-controlling shareholder's directors have an inhibitory effect on the overinvestment,this paper analyze the effects of non-controlling shareholder's directors on overinvestment,and analyze the intermediary role of dividend policy.In this paper,the directors are divided into internal directors,controlling shareholder's directors and non-controlling shareholder's directors and independent directors.The previous studies on the non-controlling shareholder's directors are few,this dissertation focuses on the non-controlling shareholder's directors and analyzes its impact on the agency costs.First,as a major way to maintain their own interests,the non-controlling shareholders can accredit directors to the boardroom.The cumulative voting system is implemented in the process of director election in china,the non-controlling shareholders,holding the actual voting rights,can accredit directors.On the one hand,the directors can fully convey the voices of non-controlling shareholders;on the other hand,they can also supervise the controlling shareholders and corporate executives.Secondly,there is a vacancy in the supervision of independent directors in our country.As another important mechanism to solve the agency problem,the independent director system is considered to be effective way to restrict the opportunism behavior of controlling shareholders and management.In western developed capital market,independent directors accounted for a high proportion in the board,the western existing research mainly around the independent director.However,the proportion of independent directors in china is far below the developed capital market,but there is a significant proportion of the non-controlling shareholder's directors.In addition,from the prospective of the electoral process and remuneration,non-controlling shareholder's directors do not receive remuneration from the listed company,which is paid by their accreditation company.The majority of independent directors are nominated or appointed by the controlling shareholders and corporate executives,and receive from the listed company.Hence,the non-controlling shareholder's directors for the supervision of the controlling shareholders and corporate executives may be stronger.That is to say,the non-controlling's directors can reduce effectively agency costs.Based on the listed manufacturing companies during 2010 and 2015,this paper studies the effects of the non-controlling shareholder's directors to the overinvestment and dividend distribution.These results indicate that the non-controlling shareholder's directors can restrain the overinvestment behavior.These results indicate that to some extent,the non-controlling shareholder's directors can restrain the over-investment behavior.Further studies show that directors accredited by non-controlling shareholders are conducive to the payment of dividends.Moreover,the higher ratio of non-controlling shareholder's directors in the boardroom,the higher dividend payout ratio is.At the same time,the dividend policy can restrain the over-investment behavior.The higher ratio of the dividend payout,the more obvious the monitoring effect on the overinvestment is.In addition,we also find that independent directors are useless in restricting overinvestment behavior.Our country currently is in the period of economic transition,it is common to find how to improve the corporate governance structure in china.At the same time,China's new round of the reform of state-owned enterprises clearly pointed out,"strengthen internal checks and balances constraints,strengthen the construction of external directors." In order to reduce the widespread agency costs in china.This paper has a certain reference value for improving the corporate governance structure and reducing the agency costs.