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On the governance of listed companies shareholders behavior thinking

Author: YuZhenWei WangZuo From: www.yourpaper.net Posted: 2010-04-29 22:39:06 Read:
Paper Keywords: balance of the shareholding structure of financial reporting fraud equity
Abstract: major shareholders control of listed companies, private gain invaded and occupied by the interests of listed companies, financial reporting fraud to conceal large shareholder behavior means. This article from the phenomenon of large shareholders prejudicial to the interests of listed companies begin to study the correlation between the equity structure with fraud, governance recommendations of the behavior of the major shareholders equity checks and balances and to cultivate the largest shareholder fiduciary duty.
Questions and literature review
In the governance of listed companies, the controlling shareholder of integrity is very important. Today, insider trading and other serious damage to the interests of small investors phenomenon happened quite frequently. Securities market by the "false" harm can be described as light, false been inseparable market. Integrity light is false clouds obscured: Joan source, ST red, Daqing Lianyi to Guangxia, Macat ...... false wind wreak havoc, not only the market credibility crumbling, more young China Securities The market is being severely eroded. Therefore, to establish credibility became a multi-party consensus. This. Former chairman of the China Securities Regulatory Commission Zhou Xiaochuan has explicitly suggested that rule use about l0 years to establish the integrity of the capital markets. Only through the implementation of the "Corporate Governance Guidelines" to improve corporate governance, fundamental gradually restore market confidence.
In the country, Dealing, Du Ying, the first time the relationship between the quality of corporate governance and accounting information Empirical Analysis, SFC the punishment listed companies and control sample companies as of 2002 as a research object, drawn in the shareholding structure is as follows CONCLUSIONS: Compared to non-fraud company fraud proportion of legal person shares of the company higher, the lower the proportion of tradable shares: the company's largest shareholder is more likely for the State-owned Assets Supervision and Administration Bureau. Liangjie Deng SFC the punishment listed companies and control sample companies as of 2003 as the object of study in the shareholding structure of the correlation analysis the following conclusions: the proportion of state-owned shares and financial reporting fraud are related, the proportion of outstanding shares and financial the reporting fraud negative correlation, the proportion of institutional ownership had no significant effect on the quality of financial reporting. Masahiko Aoki (1995) In addition, enterprises in the economic transition process in Eastern Europe and the CIS countries, and that the "internal control" is a potential phenomenon inherent in the transition process. However, with the establishment of modern enterprise system reform in depth, national and local levels, the establishment of the SASAC, solve the years of existence of the state-owned enterprises bull management, investor vacancy. Investor - Vacancy is mainly due to the internal control issues, and this problem has been part of the solution, based on the overall condition of the listed companies at this stage, "internal control" has not fundamentally embodies China's corporate governance problems . According to previous studies confirmed, in our country, between the largest shareholding ratio and enterprise value exists inverted u-relationship model deduction argument or empirical test have discovered this conclusion. That is when the largest shareholding ratio under certain proportion of enterprise value with the increase in the proportion of a controlling stake in increasing the largest shareholding ratio is above a certain percentage of the enterprise value with the increase in the proportion of a controlling stake in reduced . That is commonly referred to as two views of large shareholders on corporate governance: First, "the interests of the synergies, that is the major shareholder of free-riding psychological weakened with the rise of the stake. The largest shareholder interests and the interests of the whole enterprise gradual convergence, which major shareholders are more motivated to monitor management's performance, enhance enterprise value; the "trenches defense effect", that is, with the largest shareholding ratio rising. Major shareholders control capacity will also rise, to large shareholders may be emptied corporate assets, reduce the enterprise value through related party transactions.
In a foreign company ownership structure of 27 developed countries, the country studies, LaP0na, Lopez-de-Silanes and Shleifer (1999), found that the common ownership structure is the largest shareholder dispersion than people think holdings. The shareholders holding a dispersed shareholding different, it may be inconsistent "purpose" of corporate governance and accounting information. If management has motivation to whitewash report by earnings management. Deception shareholders, then under the control of the major shareholders, large shareholders may have an incentive to control management, defraud minority shareholders. Agency problem between large shareholders and small shareholders are becoming the focus of attention. Especially the control of the largest shareholder and enterprise value relationship is the theoretical and practical circles is more contentious issues. In particular, the optimal ratio of the largest shareholder equity or equity checks and balances.
Holdemess (1988) summarized the major shareholders against the interests of the minority shareholders usual manifestations: major shareholders in the company as a manager, a posh office room, the purchase of expensive cars, the company charges for its own significant amounts of prepayments: major shareholders draw excessive salary: large shareholder and the company with the competition; higher than the market price of the property sold to the company the largest shareholder in the company office;
Company loans at below market interest rates higher than the market interest rate loans to the company: in spite of the company's cash tensions pay dividends or prevent forcing it to pay dividends to the minority shareholders to sell the stock at a low price to the largest shareholder; issuing shares to dilute minority shareholders the shares value; issued stock for misstatement. In the actual operation of the stock market in China. The largest shareholder of violations of minority shareholders mainly in the following aspects: the transfer of the interests of listed companies, financing and refinancing trap and largest shareholder profit manipulation. According to the Research Institute of Shenzhen Stock Exchange launched a report entitled the related party transactions of listed companies in regulatory issues study reported that about 70% of the listed companies of our country there are related party transactions, of which more than 70% of the amount of related party transactions in between the listed company and its controlling parent company. Due to the prevalence of dominance equity phenomenon, related party transactions of listed companies and the parent company is one of China's listed companies have not been able to cure the disease. Most likely to cause non-fair pricing due to related party transactions. And related party transactions and hidden, some controlling shareholders took advantage of their position to control the expense of the legitimate interests of the shareholders of listed companies and medium and small significant related party transactions, to unreasonably high prices to sell their products (or low-quality assets) (or replacement) to the listed company, in exchange for cash (or good assets) of the listed company, or to purchase products from the listed companies or assets at unreasonably low prices. Not even to pay the price. Resulting in the listing of the Company's accounts receivable increasing, funds are long-term occupation of a direct and serious impact listed companies in the normal production and operation. Party some shareholders simply related party transactions as an intermediate step, the indirect transfer of assets of listed companies.
Second, the theory
Theory. Ownership structure determines the allocation of company ownership or control over remaining shareholding structure, including two aspects: one refers to the company's shares which shareholders held: two refers to some proportion of shares of the company's total shares held by each shareholder how much. The former is a description of the characteristics of the holders of the shares, the shareholding structure of the manifestation of the qualitative: while the latter is a description of the extent of equity centralized or decentralized, is a manifestation of the amount of equity structure. The shareholding structure of choice is one of the company's most important strategic decisions, the equity structure of the equity owners of the contractual arrangements, and with profound internal relationship between the corporate governance structure, corporate strategy, the company's growth and the value of the company. On the shareholding structure of the research, particularly on the theoretical and empirical study of the structure of listed companies in transition countries, at home and abroad in recent years, the financial sector experts, academics, research hotspot. The main problems of the current shareholding structure of listed companies in China is the largest shareholder of control, that the interests of large shareholders and minority shareholders dispute. Major shareholders as an important mechanism to solve the principal-agent problem. Plays an important role in corporate governance. A prerequisite of the role of major shareholders is consistent with the interests of large shareholders and small shareholders, In fact, the presence of large shareholders and small shareholders with conflicting interests, a lot of ways to obtain private benefits associated with the major shareholders of minority shareholders and the interests of the company encroachment, encroachment is often accompanied by a lot of interests transferred to monetary terms, the collusion of large shareholders and managers will further damage the listed company and the interests of minority shareholders. Related party transactions, the largest shareholder through unfair pricing, the interests of the company transferred to the germane associated enterprises, transfer of benefits become more convenient when the major shareholders and managers conspired encroachment behavior inevitably true disclosure of accounting information disclosure related transactions, by means of the financial reporting fraud to conceal information about the asymmetry of information so that minority shareholders can not access to business information. In the shareholding structure of such large shareholders can take advantage of its dominant voting power transfer of the interests of the listed company Great, the hands of the shareholders, at the same time, the largest shareholder commitments because of the benefits transferred to the listed companies only in accordance with the proportion of the equity owned losses. Inflated profits, inflated assets and its essence is not a major shareholder of listed company to transfer high-quality resources, but rather a result of the interests of listed companies is a large shareholder expropriation. Occupation of the interests of the major shareholders of listed companies, the decline in performance of listed companies, which may be eligible for allotment listed companies lose even been delisted, thus losing the chance of re-financing, major shareholders will not easily allow listed companies to lose the opportunity, therefore, shareholders to use its advantage to control the management of listed companies, to manipulate profits of listed companies, to maintain the privilege of further encroachment profits of listed companies. At the same time, the study found that the largest shareholder through the pyramid holdings to smaller funds invested in exchange for greater control over the separation of cash flow rights and voting rights exist, and this phenomenon is also quite common, which makes The largest shareholder has a motive to harm the interests of the company through the manipulation of the management.
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