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The large shareholders tort analysis

Author: ZuoQin From: www.yourpaper.net Posted: 2009-07-15 07:48:11 Read:
Abstract: Currently, listed companies "internal control" prominent phenomenon, supervision, restricting function insufficiency, frequent damage the interests of the small and medium investors. And law on the lack of adequate protection of investors, the largest shareholder of listed companies in China to use its control of the seriously infringe on the interests of small shareholders. Mechanism by analyzing the behavior of the major shareholders, and problem-solving policy recommendations.
Keywords: large shareholders; listed companies; infringement

Major shareholders of listed companies positive control behavior of small shareholders "free rider" behavior is endogenous choice of system of corporate governance, an important mechanism of internal control of the listed company, unable to play a role in the legal protection and external control over the market, the presence of the major shareholders of great significance for the protection of listed companies shareholders' equity.

A major shareholder of tort mechanism analysis

Second class of agents in the case of a high concentration of shareholding, according to the Company Law "capital majority decided, in principle, more shareholders vote the greater the force, once a large shareholder owns a listed company enough currency ballot this major shareholders by the resolutions of the shareholders' meeting in the form of legally individual will rise to the will of the company, resulting in the agency problem between the controlling shareholder and minority shareholders. In general, the major shareholders in the corporate governance performance of the two opposite role, that the interests of the convergence effect and Tunneling effect.
(1) the interests of the convergence effect: a classic paper by Shleifer and Vishny 1986 that dispersed ownership under unsupervised managers with respect to the presence of a large shareholder can solve the company's internal control problems, and improve the company performance, and access to their own interests. Listed companies, the supervision of the managers can be seen as a public good, and to provide oversight of the shareholders will bear all the monitoring costs, but only in accordance with the proportion of its equity share part of the proceeds. Although the the small shareholders optimal strategy is always the "free-rider", but with the rise of the largest shareholding ratio, as long as a single large shareholder received supervision of the share of total income greater than the supervision of the total cost, the major shareholders have enough incentives to collect information and the effective supervision of the management directly involved in the operation and management, and in some cases, to solve the problem of "information asymmetry" of external shareholders and internal management of the investment opportunities, performance, therefore, the largest shareholder of "supervision hand "will help to increase the value of the company.
(2) Tunneling Effect: Shleifer and Vishny 1997 further proposed to play a good role in the premise of the largest shareholder with a good legal environment for the protection of small investors, in order to avoid major shareholders through the hands of the control of the damage the interests of small shareholders. If the legal system is imperfect corporate governance mechanism is not perfect, external regulatory agencies and there is a major defect, the Board will most likely be the single largest shareholder of manipulation, then the controlling shareholder and then build their own management team hired by the Board of Directors, although the presence of the controlling shareholder and not necessarily produce infringe on the interests of minority shareholders, but when both the objective function is different from information asymmetry, the controlling shareholder will use the personal information advantage to take opportunistic behavior, and another branch to seek to maximize their own interests " grabbing hand "harm the interests of small shareholders, reducing the value of the company.

2 major shareholders tort cause analysis

The 2.1 internal governance mechanisms defects
(1) "due to the dominance of the" principle of the majority of the equity structure and capital led to the formalization of the general meeting of shareholders. Large shareholders can manipulate the general meeting of shareholders, major shareholders legal transfer of the interests of listed companies the tools from the evolution of a democratic decision-making body of the shareholders' general meeting, minority shareholders can not exercise their rights by "hand vote". Especially large shareholders often set up artificial barriers, deprived of some of the minority shareholders the right to participate in the general meeting, modify the Articles of Association, the election and removal of directors, supervisors and disposition of company interests, often "one-vote veto" to restrict or prohibit the minority shareholders speak .
(2) The independent directors are not independent. In order to strengthen the independence of the directors of the Board in fulfilling its oversight responsibilities to managers, the introduction of the independent director system in China in recent years, but due to: the election of independent directors is the largest shareholder of the intention or facilitated by large shareholders recommended; independent The directors are often part-time, no time to understand the situation of the company; (3) independent directors not shareholders or any person responsible for, there is no effective supervision and restriction on them; independent directors remuneration paid by the largest shareholder. Therefore, an independent director is not "independent".
(3) managers too much power, the lack of incentive and restraint mechanisms. Administrative color of non-tradable shares of existence and on the qualifications of the vital interests of managers and the company's performance does not matter much, the lack of incentive and restraint mechanisms managers, managers too much power over "on-the-job consumption" , "59-year-old phenomenon is widespread. The 2.2 external governance mechanism lack of
(1) external market system is not perfect. The presence of a large number of non-tradable shares of China's capital market to the lack of liquidity, the share price does not reflect the value of the company, it is difficult to obtain control of the company through the purchase of outstanding shares in the secondary market, even if all the individual shareholders' voting with their feet "can not form a substantial pressure on managers, market mechanisms such as mergers, acquisitions and takeovers more difficult role to play.
(2) the intermediaries involved in the fraud. Small shareholders primarily rely on financial statements to understand the company's operations and financial condition, and the authenticity of the financial statements by the accounting firm identification. The last two years, and frequent exposure of listed companies faked, the Shenzhen Zhongtianqin large number of accounting firms in their own interests, failed to fulfill its due responsibilities in accounting information disclosure of listed companies, and even participate in the fraud, issuing false audit report , deceiving shareholders.
(3) information disclosure system is imperfect, the damage to the small shareholders expanding. Strict information disclosure system is to protect the interests of minority shareholders, but it is highly non-standard, but the information disclosure of listed company controlled by the largest shareholder, artificially created a monopoly on information, and increase the cost of access to information for small shareholders. The policy of the city, "the news City" insider trading is prevalent, serious damage to the interests of minority shareholders.

3 to avoid the largest shareholder violations solutions

(1) to intensify supervision, improve the level of regulation. First to establish a regulatory system that covers the whole process of the capital business, vigorously and use modern means of supervision, the establishment of the risk early warning system and the regulatory network system, perfect and innovative regulatory tools, the formation of a strong regulatory system. Second, we must strengthen the audit of listed companies, and to crack down on market manipulation, insider trading and false statements, and other illegal and criminal activities, the promotion of fundamental improvement of the capital market order.
(2) to improve the credibility of the information disclosed. Establish and improve the information disclosure system, to minimize the information asymmetry between the controlling shareholder and minority shareholders, the protection the external of minority shareholders a fair right to receive information, which is the core task of the securities regulatory authorities to protect the interests of minority shareholders. To do this, we must first promote the improvement of existing international accounting system and information disclosure rules. In order to standardize the information disclosure behavior of market players, the rules of the game should be developed. For listed companies, the financial position of the related party transactions of listed companies, the investment behavior of listed companies and other significant matters that affect the company's business, minority shareholders should have the full right to know. Based on real information, it is necessary to establish a unified information dissemination channels.
Effective information disclosure mechanism is a typical characteristic of effective supervision of the parent company, is the key to the shareholders exercise their voting ability, is also the most powerful tool to protect the interests of minority shareholders. Good corporate governance structure requires the information disclosure of the use of high-quality accounting standards - IAS, to improve the comparability of information between countries, require reliable information audit to ensure the accuracy and authenticity of information disclosure, the company's internal audit The Committee shall be an independent director.
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