Case Analysis Of Vanke-Baoneng Battle On Control Right

As the leading enterprise in Chinese real estate industry,Vanke has been suffered from a sequence of equity purchases from Baoneng Group since the second half year of 2015.During the process,Baoneng revealed his wild ambition of gaining the control right of Vanke.The management team of Vanke,represented by Shi Wang,called Baoneng as "Barbarian at the gate" and took a series of actions to fight back,and finally safeguarded the control right.With the transition of Chinese capital market form corporate ownership concentration phase to equity separation stage,modern enterprises face the potential danger of invasion from "Barbarian at the gate",because the control right becomes weak with less concentrated ownership.This paper will analyze the case of "Vanke-Baoneng" ownership battle based on the logic from case introduction,to case analysis,to case insights,highlighting what corporate governance issues companies with dispersed ownership like Vanke might have.The paper adopted Event Study Methodology and Accounting Index Analysis to analyze how the batter on control right would affect company's short-term and long-term financial performances.The data results show that when a company's control right is threatened by the "Barbarian at the gate",in short team there's be a negative impact on its stock price,in the long run company's profitability would be affected negatively and financial risk would be increased.This battle revealed the environment and potential risks for enterprises in transition stage and evokes the reflection on how to optimize the ownership structure to eliminate the negative effect of weakening control right,and how to optimize the corporate governance structure to better involve the protection of the interest of small and medium stakeholders into the design of the governance framework.