Behavior Of The Major Shareholders Of Listed Companies In China, Non-efficiency Investments And Corporate Governance

It is the focus about the investment efficiency of listed company on academic and financial management, and the non-efficiency of investment behavior of major shareholders is big problem in recent years. Major shareholders controlled the listed company are universal facts, as the end of 2010, the first major shareholders of listed companies accounted for more than 50% equity 22%, but in the last ten years it accounted for 61%. There are dual effects on the presence of large shareholders of listed companies:one hand is to monitor the managers that will help improve the efficiency of the company's investment, the other hand is to occupy the interests of minority shareholders and emptied value of the company, then reduced the company's investment efficiency.The current ownership structure of listed companies has the big change from decentralized to Concentration. The conflicts of shareholders-the manager's agency on corporate governance have evolved to shareholders-the manager's agency problem and the major shareholders-the coexistence of small shareholders, and the latter even more intense. The deviation of control rights and income rights led to major shareholders occupied the interests of minority shareholders, when its control rights are over much larger than the income right, they will get a variety of ways to gain control over compensation, which will cause inefficient investment behavior of listed companies.Inefficiency investments can be divided into non-investment and over-investment. Over-investment and insufficient investment co-exist in listed companies, but the overall performance of the over-investment. From the industry perspective, the financial crisis and financing constraints impact the investment obviously insufficient in the sector of listed companies, and the country's industrial policies is closely related to investment in different industries and have greater difference. As the major shareholders are absent in State-owned listed companies, in order to control risks and keep their own performance, their agents choose the under-investment.Non-efficiency of shareholder investment behavior has its own specific motivations, especially when the listed companies faced with difficulties.The listed companies inefficient investment is closely related to the control rights with the largest shareholder, when the deviation is greater to the control rights and income rights of largest shareholder, the more inclined to invest the project's that overall gains for the poor but the private benefits are higher, so it is will be reduced company efficiency, and resulted inefficient investment. Major shareholders tend to invest in high-risk projects, the greater risk will take the more private benefits, but the behavior will greatly reduce the efficiency of investment and damage the company values, and also will bring more great risk on the real economy.Building the model of the major shareholder of inefficient investment behavior to study the relationship among the controlling shareholders, block holders, ownership concentration, board of directors and the manager's monitoring and collusion, equity nature and extent of competition in product markets and listed company's non-relationship and the efficiency of investment, the conclusion that are the relationship is non-linear between controlling shareholders and inefficient investment ratio;the second largest shareholding ratio can effectively control over investment, but lead to insufficient investment, in general can control the behavior of the largest shareholder;the more concentrated the market share more easily leads to over investment, it is positive relation between ownership concentration and non-efficiency investments;the collusion about the board chairman and the manager's will lead to inefficient investment, both of supervision can control the inefficient investment;state holding listed companies more prone to inefficient investment;degree of competition in product markets will increase the listed companies investment, and inhibit the insufficient investment, which is both highly competitive nature of product markets lead to the probability of inefficient investment increased, maybe also to be the washes of the listed company's management to strengthen its the competitiveness of products.It is very common in China that the largest shareholder to inefficiently invest and empty the value of the company. Studies the three classic cases, the conclusions are that large shareholder use the way to occupy the capital and empty the value of listed companies to encroach the interests of minority shareholders. The reasons one is that the listed companies largest shareholders are absent; the other is that largest shareholders have great control rights. Nowadays, the laws and regulations to protect the interests of minority shareholders are imperfect, yet the effective mechanism for litigation rights of minority shareholders does not form, and lack the effective supervision of the controlling shareholders. The conclusions about the paper to change the inefficiency of investment behavior of the largest shareholders of listed companies in China, firstly to established the incentive mechanism the company's system to ensure the control rights and income rights of largest shareholders are consistent. Secondly, keep the stock ownership moderate concentration, and maintain the top five shareholders to mutual balances, at the appropriate time, introduce the institutional investors to play the important role in corporate governance and financial audit. Thirdly, make appropriate use of financial institutions; particularly banks play the roles in corporate governance, debt and financing constraints the largest shareholder inefficient investment behavior. Lastly, establish the law and effective mechanisms to protect the minority investors; improve the capital market to play a regulatory force of service and strengthen supervision, especially in terms of information disclosure to prevent largest shareholders occupy others interests and empty the value of the listed company.