Research On The Effectiveness Of Hostile Offer Acquisition To Alleviate The Problem Of The Second Type Of Agency Problem

The principal-agent problem has always been the research focus in corporate governance.Different equity structures will have different agency problems.The scattered shareholding structure will cause small and medium-sized shareholders to be unable to supervise the company's management and generate the first type of agency problem.The centralized ownership structure makes the controlling shareholder of the listed company seek private profits,infringes the interests of small and medium investors,and triggers the second type of agency problem.In response to the second type of agency problem,domestic scholars have found that the equity of listed companies in China is relatively concentrated,and the second type of agency problems are widespread and serious.The controlling shareholders use different means,such as related party transactions,illegal guarantees,injecting value-inflated assets,etc.Shorten the assets of listed companies and plunder the interests of small and medium shareholders.The small and medium-sized shareholders have low voting rights and high supervision costs,making it difficult for external supervision to display and adversely selecting adversely,which affects the healthy development of the capital market.At the same time,there are listed companies with controlling shareholders.The internal management methods of the company are difficult to display.The independent directors,board of supervisors and board members are nominated by the controlling shareholder who has control.The independence is low and it is difficult to form effective constraints on the controlling shareholders.The "Company Law" implemented in 2006 and the "Management Measures for the Acquisition of Listed Companies" implemented in September of the same year provide a new idea for the mitigation of the serious second-type agency problem in Chinese capital market — — hostile takeover.Scholars have found that hostile takeovers have positive significance in corporate governance.Rational hostile takeovers can effectively restrain the controlling shareholders of listed companies with poor governance,and also protect the interests of small and medium shareholders.However,in the "Company Law" and "Administrative Measures for the Acquisition of Listed Companies" for more than a decade,there have been few successful hostile takeovers in China,and there has been no successful case support for whether the hostile takeover can alleviate the second type of agency problem.Therefore,this paper mainly uses the case analysis method to take the hostility of Hangzhou Zhemintou Tianhong Investment Partnership(Limited Partnership)(hereinafter referred to as Zhemintou)as a successful case,and whether the hostile offer can alleviate the second type of agent.The problem is analyzed in detail.A comprehensive analysis of the changes in the shareholding structure of ST Biochemistry companies and the changes in the interests of small and medium shareholders before and after the hostile takeover bid.The research results show that the hostile tender offer can alleviate the second type of agency problem to a certain extent.Firstly,through the comparison of the company's shareholding structure,the former controlling shareholder Zhenxing Group retired to the second shareholder,and Zhemintou entered the listed company ST Biochemistry to become the controlling shareholder,forming a check and balance on the original controlling shareholder.According to the theory of equity checks and balances,there is a positive correlation between diversified shareholding structure and corporate performance and governance.Therefore,the change in the shareholding structure has alleviated the second type of agency problem to some extent.Secondly,Zhemintou has reorganized and replaced the board of directors and members of the board of supervisors to better play the internal governance mechanism of the company and protect the interests of small and medium shareholders.Thirdly,due to changes in the company's controlling shareholder,the separation rate of the two rights is reduced,which indirectly indicates that the second type of agency problem has been alleviated.Fourthly,from the perspective of small and medium shareholders,this hostile tender offer is a premium purchase.The purchase price is higher than the weighted average price of the 30 transactions before the announcement of the offer.The interests of the small and medium shareholders are guaranteed,and the second type of agency problem is prevented from aggravating.Finally,through observation of the 2018 performance forecast data,it was found that the performance of listed companies after the hostile tender offer increased rapidly,and the interests of all shareholders were improved,indicating that the hostile takeover bid did improve the efficiency of corporate governance and the agency problem was alleviated.However,while the hostile takeover offer has positive significance,its limitations also limit the promotion of hostile takeovers in the domestic capital market.The limitations include the following aspects:(1)Hostile tender offer is only a short-term governance tool,and it can not produce long-term governance effects like independent director system?cumulative voting system and board of supervisors;(2)Equity concentration after hostilities The marginalization of small and medium-sized shareholders is easy to be affected by the exploitation of new major shareholders and the original major shareholders;(3)The cost of hostile tender offers is high and the amount of deposit is large,which can not be adopted by official enterprises;(4)The motivation for hostile tender offer is difficult to define and the information asymmetry is serious.After analyzing the case of Zemin's hostility to purchase ST biochemicals,the author also proposed some targeted policy recommendations for the hostile takeovers to ease the second type of agency problems,including the following aspects:increasing information transparency,clarifing the integrity obligations of major shareholders,optimizing the structure of equity governance,strengthen internal corporate governance,strengthen supervision and inquiry mechanisms in tender offer,improve the legal mechanism for protection of small and medium investors and strengthen the education of small and medium investors.