Research On The Influence Of The Non-controlling State-owned Equity Of Privateowned Enterprises On Investor Protection

The development level of a country's securities market is determined by the quality of investor protection.Therefore,how to improve the law enforcement efficiency of investor legal protection is the key to the healthy development of the securities market.As one of the civil law countries,China's judicial independence is not enough,and China is in a period of transitional economy,lacking institutional resources to support the standard investor protection system.On the one hand,the standard investor protection system is difficult to fully play its role.On the other hand,the protection of the interests of investors is easily affected by other factors,such as political connections.State-owned equity,as one of the forms of political connections,is likely to have an impact on the independence of the judiciary and thus interfere with the implementation of investor protection laws.The efficiency of securities regulatory enforcement,as one of the indicators of investor protection,can reflect the level of legal protection of investors,especially in emerging market countries with low judicial efficiency,and can be used as an alternative mechanism for judicial efficiency.Therefore,this paper judges the status of investor protection in China by studying the efficiency level of securities regulatory enforcement.In order to verify the hypothesis proposed above,the research object selected in this paper were a private listed companies in the Shanghai-Shenzhen A shares from 2008 to 2016.Then we would examine whether the non-controlling state-owned equity will affect the legal protection of investors.This paper studied the influence of state-owned equity on investor protection from the three perspectives: the impact of state-owned equity on the top management turnover,the impact of state-owned equity on the cycle of securities regulatory punishment,and the impact of state-owned equity on the market reaction to the securities punishment.The conclusions showed that the state-owned equity in private enterprises had an impact on the legal protection level of investors,which was reflected in two aspects.On the one hand,state-owned equity will play a role in supervising and governing the executives of private enterprises,but such a governance mechanism is not always effective.For violations where the cost of potential reputation damage is greater than the established revenue,shareholders representing state-owned equity will take the initiative to supervise and change relevant senior executives.For violations where the benefits exceed the cost of reputation damage,state-owned shareholders will acquiesce or even support,and the governance mechanisms failed.On the other hand,state-owned equity will interfere with the enforcement of securities law enforcement agencies,leading to longer penalties for violations.The penalties are not timely enough,which damages the legitimate rights and interests of investors.Finally,based on the empirical analysis results of this paper,combined with the reform of China's mixed ownership system and the economic background of the transition,some suggestions are made on how to improve the legal protection level of small and medium investors in China.