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Efficiency evaluation of large shareholder control of corporate governance

Author: YuYing From: www.yourpaper.net Posted: 2007-11-19 20:01:02 Read:
Practice shows that countries in transition: the reform of the economic system will help to improve the corporate governance structure often become the key to the success or failure of the reform, on the reform of the success and failure of economists have often started from the angle of corporate governance.The corporate governance structure in reality is undergoing a process of continuous improvement, and presents a series of distinctive features.This paper aims at a governance model to reflect this series features one -- Jiaodong control corporate governance as a study, based on the results of studies on the transitional direction of China Company governance structure and put forward policy recommendations.
, the control of large shareholders is the development trend of governance of Global Corporation
At present about governance model, most of the research is the Anglo-American mode and the German-Japanese mode, Mo rand (Moerland, 1995) proposed has the most distinguished representative of corporate governance structure, he will be the modes of corporate governance structure is divided into market-oriented and network oriented system.Characteristics of the market - oriented system has developed financial market, corporate ownership is more dispersed, the market for corporate control is active, the typical implementation of this system is the United States and british.The biggest characteristic of market oriented system is the existence of a kind of underperforming managers continuing external threats for replacement.Characteristics of network oriented company is the high concentration of shareholding, universal banks involved in the substantive in corporate financing and corporate monitoring and controlling.The biggest characteristic of network oriented system is the largest shareholding ratio is high, usually take on the responsibility of supervising the management layer.
To understand the general situation of the corporate governance structure is valuable for this, but according to this division is easy to fall into the errors, because the reality is always in the institutional change constantly, characteristics of patterns are changing.In the past few years, the governance structure of Anglo-Saxon corporate ownership dispersion characteristics is becoming more and more obvious, it is necessary for the cause.The history of the development of the capital market has fully demonstrated that, early in the capital market, the individual may be the main investment strength, but institutional investors will sooner or later become the most important capital market investors, will change the investment main body structure lead to changes in the structure of corporate governance, namely, institutional investors have gradually become the company's largest shareholder, so the governance structural control of large shareholders become major global corporate governance model.
Interestingly, not only is the United States of America that has developed capital markets of the country its corporate governance structure in the concentration of shareholding changes to institutional investors, in Russia, Hungary and other transition, after violent storms of the privatization reform, many of the company's shares have gone from a dispersion and concentration process, again the concentration of course not concentrated in the hands of the state, but rather concentrated in some private financial groups' hands, and at the same time, the development of the capital market is still at the primary stage.
In the implementation of gradual reform in China, the proportion of institutional investors in the capital market is also increasing rapidly, the management of excessive development of the fund industry's idea, function of fund in the listing Corporation governance structure is becoming more and more obvious, in Tongbaihui ownership dispute, of funds to a large extent determines the dispute the result is a proof.
two, on the academic arguments and evaluation of large shareholder control of corporate governance efficiency
Although the company governance structure of large shareholder control more fully play the supervisory role of the shareholders, but, in the control of large shareholders governance efficiency, there is a big controversy in academic circles.
The controversial reality environment is in the last ten years, pay more attention to the large shareholders of Japanese, German companies in general have not been than note significant shareholder supervision Usa Inc better results, the actual situation is, the United States of America the company performance was better, more competitive.This practice raises the following question: large shareholders can really help to increase the efficiency of the company?A deeper problem related to this is: to control the controlling shareholder for the characteristics of the corporate control right structure and other corporate structure is better?
For the control of large shareholders of the scholars from the empirical and theoretical studies of Jiaodong control efficiency of corporate governance, research to date suggests that: as an effective organization form, large shareholder ownership has the vitality.Holderness and Sheehan analysis of 114 home ownership concentration greater than 50% but less than 100% of the listing Corporation, in this 114, 1978-1984 period 27 become a major shareholder enterprises, but only 13 companies in the same period is no longer a shareholder enterprises, therefore, large companies are entitled to almost no net outflow, according to market their own option structure control of large shareholder control company.
Theoretically speaking, the control structure of the company, because of the differences of interests between the managers and shareholders, so shareholders are necessary to implement the supervision on the manager, in order to make manager for the benefit of shareholders, however, because of the cost of supervising the supervisor to bear, and the revenue generated by the supervision shareholders, including creditors share, supervision of the managers is actually a kind of public goods, for small shareholders, because income is far less than the supervision to provide supervision cost, so the minority shareholders are usually not active supervision, because of this, the law also gives small shareholder voting by foot free, and when the company's shares at a certain ratio (also known as a big shareholder), monitoring line investors may yield more than the cost of supervision, the enthusiasm of investors will have supervision.That is to say, only more than a certain percentage of the investors, provides oversight of such public goods will become a kind of rational behavior.
The supervisory role of large shareholders, Fei Fangyu (1998) made a more in-depth exposition, Fei Fangyu (1998) for a more in-depth explanation, Fei Fangyu think: the supervisory role of large shareholders, mainly manifests in the following several aspects: first, the shareholder has power applied credible threat for managers, based on their own interests, large shareholders are even willing to undertake the prosecution of incompetent manager cost.Second, is to promote the takeover activity, the more stock holdings of major shareholders, the premium (paid to shareholders over the market price premium) is lower, its reason is many owned by large shareholders, even if the share premium rarely, major shareholders of the total premium income is low, so the large shareholders may be willing to transfer the shares, while small shareholders do not normally accept the offer price premium is too low.The author thinks: the imposition of credible threat of managers, the supervisory role of large shareholders is beyond doubt, as far as the ownership concentration is promoted to take over, is an unproven idea.We believe that: analysis of the function of board of directors, is key to understanding the governance of large shareholder control.
The board of directors is a proxy to exercise the shareholder power structure, supervision and the shareholders to the board of directors, refers to the supervision of the board of directors of the manager.The board of directors as agents of the shareholders, a supervisor position in the supervision on the manager's.The basic principle of economics tells us, the supervisor's supervision power, because it is providing supervision is the rational choice of supervisors, directors may not because of its directors and enjoy the residual claim right, therefore, will inevitably appear who supervise the supervisor (i.e., the directors and the board of directors) of the problem.
In the dispersed ownership structure of corporate control rights, generally speaking, shareholders are not supervising the board of directors, therefore, dispersed equity shareholders supervision mechanism of company failures due to lack of supervision power of shareholders, this is Bailey Rice said the separation of ownership and control rights, the separation of ownership and control of the means is not control does the right to transfer to the managers, at least in the law, as long as there is no into liquidation, the company is still in the hands of control shareholder, just because the dispersed ownership and all shareholders choose to ride, so the manager can control the company in fact.
In the power structure control of large shareholders in the company, big shareholders in the board of directors on behalf of shareholders have even sent to dominate in the board of directors, shareholders have the power of supervising the board of directors of the interests of their own needs based on the final source of power, supervision is the major shareholder of the residual claim rights.
Not large shareholder control of corporate governance scholars from all aspects of defects of large shareholders in corporate governance.Romanto (1993) think: people usually have high hopes for may play of institutional investors in corporate governance, but may play the role of institutional investors is exaggerated, although large institutional investors -- including pension, mutual funds and insurance companies hold a large proportion of the shares of the listing Corporation, but these financial institutions professional financial managers may not be particularly good at supervision and management, and portfolio management because, to a company needs the skills required are not the same, and, in the case of management boycott, affect a large shareholders can actually implement is limited.
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