The Research On Corporate Control Transfer Of Chinese Listed Companies

Corporate control transfer of the listed companies is one kind of enterprise mergers and acquisitions. The process of control right transferring is that different interested stakeholders competing with each other for the right of corporate resources management. Along with the corporate control market gradually being formed, which is effective and using unified pricing standard, events of corporate control transfer in Chinese listed company will occur frequently. Transfer of control has become an important way for a listed company to expand and realize its strategic target. Therefore, no matter for the controlling shareholders, listed company's managements, or for the securities regulatory authorities, the study on the corporate control transfer has great theoretical and practical significance.This paper researches on the corporate control transfer of Chinese listed company, based on previous research results, integrated using document analysis method, qualitative analysis and quantitative analysis methods, also the combination method of practices analysis and empirical analysis. Combining with the unique institutional background of China's listed companies, this paper uses the econometric analysis tools to make an in-depth and systematic study on the market reaction of corporate control transfer, the performance impact of corporate control transfer, the effective factors affecting corporate control transfer performance, the value and the policies of how to regulate the corporate control transfer. Then it can provide theoretical support and policy advice to further improve the governance of listed companies, regulate the market for corporate control, curb the violations of controlling shareholders over minor investors, and to protect minor shareholders' interests.Based on the understanding of listed company control market theory, contract theory, principal-agent theory, stakeholder theory, transaction cost theory and property theory, this paper analyses the system background of corporate control transfer, the current situation, motivation, and characteristics of corporate control transfer. The study suggests that the system background of listed company corporate control transfer shows the following characteristics:corporate governance structure is not perfect, accounting information discloses incompletely, dual-ownership structure, and the market supervision is weak. The establishment of the control transfer market is short, there are many irregularities in the system and operation, the over administrative intervention by government and weak supervision, which caused the supervision of corporate control transfer out of control.This paper makes a statistical analysis about the year distribution, date characteristics, areas and industrial distribution of corporate control transfer of Chinese listed company. It shows that the dates of corporate control transfer are not uniformity, and most of the transfers are happened in the fourth quarter. The top10areas of corporate control transfer events are Shanghai, Guangdong (excludes Shenzhen), Beijing, Sichuan, Hubei, Shandong, Hainan, Shenzhen, Liaoning and Hunan. The corporate control transfer of Chinese listed company are mainly concentrated in investment, information technology, trade, machinery equipment industry, metal and nonmetal, real estate and chemical industries, etc. Transferring through equity agreement is currently the main way to transfer the control in China's listed companies.This paper makes an empirical analysis of the overall market reaction of corporate control transfer and the different market reaction when transferring in different ways of agreement transfer, free transfer, and acquired control right gradually in secondary market. The research finds that the CAR is negative, and it drops heavily in line in the first20days. During the full window time (20days before and20days after the transfer), the CAR has decreased more than5%, which is due to the investors suppose the transfer is looking for lease when most of the transferring in China is in free or in agreement way. Despite the lack of liquidity in state-owned legal person shares of listed companies in China, control transfer still caused a positive response from the market.This paper chooses42listed companies that happened control transfer in2007as the research objects. It analyses whether the transferring will bring the impact on company performance through comparing the indicators including return of average assets, return of sales, asset turnover and ROE with that of the paired sample companies from2006-2010. It proves that performance of the companies increased significantly in the first year after transferring, but this trend not continued in the second and third year, which means the performance is only improved temporarily but not last long. According to the analysis, the average and median value of the three indicators of control transfer company have a definite upward trend, but most indicators are behind rising speed of paired sample companies, which explains the transferred company needs a rather long time to catch up with industry speed, also the improvement of performance is resulting from the higer operational efficiency and profitable ability.This paper uses the discrete Log-logistic opportunity rate to judge the existed rational bubble in the transferring value. It suggests that when measures in CAR, the transferring value will be more if ignore the existed bubbles during transferring. At the same time, the share premium is only2%during the control transferring of companies listed in Shenzhen Stock Exchange, which is far more below6%in Shanghai Stock Exchange. Here we notice that the intrinsic price of share is far more below the constant increase value before the announcement for transferring. Considering the time and magnitude of rising, that of companies listed in Shaihai(60days,11%) are higher than the companies listed in Shenzhen(20days,6.5%). But in the reverse correction level,4%of Shanghai'is lower than5%of Shenzhen'. In all, the control transfer of listed companies can create value for society.Finally, this paper discusses the measures to regulate the control transferring, and makes the research on how to optimize the transfer arrangements from the view of shareholders, creditors, managements, and buyers. It also discusses the policies and paths of regulating the corporate control transfer. The study shows optimized arrangements of controlling rights of listed companies in China depend on relative importance and effectiveness of supervision between the listed company shareholders, creditors, nanagements and buyers. The measures for the regulation of China's listed company control transfer would come from these aspects: optimize stock exchange market environment, strengthen the supervision of government and participation of creditors in the merger project, standard market for corporate control, etc.