The Research On The Issues Of Large Shareholders' Taking Up Funds In China's Listed Companies

The problems that large shareholders and those affiliated parts take up funds have seriously influenced the development of our stock market. The quality of listed companies is the base of the healthy development of the stock market. The social resource distribution depends on the efficiency of the listed companies' management. Compared to such problems as the market fluctuation and ill operation of enterprises, large shareholders' taking up funds has become the biggest risk to their listed companies, which affect the following aspects seriously: firstly, it influences investors' confidence; secondly, it has bad effects on the management of listed companies, causing profit drops, weakening the foundation of the stock market and restraining the function of collecting capitals; thirdly, it is bad for the capital market to build up the orders and regulations. The causes why large shareholders' taking up funds cannot be prohibited lie in the following aspects: first of all, listed companies have not changed their system completely, which means the state-owned stockholders' covering the large percentage of the shares has led to the management balance losing; in addition, the situation of a listed company having two kinds of shares makes those who have circulated shares have different interest aim from those holding non-circulated stocks; what's more, it does not cost a lot if some large shareholders violate the regulations in China and civil rights compensation rules in stock markets have not been established and the rights protection of small and mediate shareholders is lack of strong and powerful support; the last but not the least, different aspects have arguments to the problems caused by large shareholders' taking up funds.On the basis of the analysis of the current situation that large shareholders take up capitals, applying the methods of Quality Economy, this thesis analyzes the influential factors that will cause the large stockholders' behavior of maximizing the value of stock option and then draws some important conclusions: compared to the upper limit of their taking up the listed companies' capitals, if the natural value of large stockholders' option is small enough, then their option value can be maximized when they take up the greatest amount of capitals permissible. If the natural value of large stockholders' option is higher than the upper limit of their taking up the listed companies' capitals, they can maximize their option value by not taking up capitals or taking up fewer capitals. As long as the upper limit of their taking up the listed companies' capitals is high enough, large holders will have the greatest motivation to take up interest. This thesis builds two Game models through which large shareholders' action features as well as the main factors and mechanism that may affect their taking up funds have been studied. It also researches into reasonable price that large shareholders use stocks to pay for their debts. Through the analysis of the taking-up-fund Game model, I find out the following phenomenon and results. To begin with, the lower of the percentage of stock option that large shareholders have in listed companies, the stronger of the motivation that they will take up funds. Also the solution of the composition ofshareholders does not mean the phenomenon that large shareholders take up funds can disappear easily. Furthermore, the higher of the profit rate of the capital belonging to non-listed companies, the stronger of the motivation that they will take up funds as well. And the worse the management of listed companies is, the more possibile that large shareholders may abuse the funds of the companies, which will lead those companies to difficult financial situations. Moreover, the more there are investors, the more possibility that they will take up funds and also the higher potential motivation that they may coerce the government. If the per unit punishment cost is raised, the motive force of large holders' taking up funds will be lowered. When the cost is high enough, this kind of behavior can be stopped effectively. According to the analysis of the guarantee Game model of those large holders by their listed companies, I find some results as follows: large holders are more likely to apply the warrant of their listed companies to get funds than to take up the companies' capital directly; if they have the motivation that they do not want to give back the funds they borrow, they will have a higher possibility to use the listed companies as their guarantee. Then in the light of price comparison Game model that large shareholders use stocks to pay for their debts, I obtain these results: only when large shareholders do not take up funds and the price of net capital of each share is higher than the price that large shareholders fix to use stocks to pay for their debts can those small holders' benefits be protected; if the price in which large holders use stocks to pay for their debts equals to the net capital of each stock or is lower than it, the interest of small holders will be damaged; eventually, I offer a reasonable price range.This thesis studies the changing trend of large holders' behavior after the reform of changing the situation that a listed company has both circulated and non-circulated shares. It also analyzes the difficult points after this reform in monitoring the behavior of large shareholders. According to the previous analysis and research, I point out that if we want to solve the problems caused by large shareholders' taking up funds, we must call on the supervision and motoring from different aspects of our society including: building up the regulations to balance stock option and forming a reasonable option structure; perfecting the management of listed companies and raise their quality; raising their cost if they violate regulations and perfecting the system to protect small and mediate investors; enforcing the law firmly; strengthening the supervision on the behavior of large holders after the reform; introducing the principle of real equal rights of all shareholders; providing more convenience when small and mediate shareholders want to exercise rights; protecting small and mediate shareholders' lawsuit convenience when their rights are violated; making publicized information equally reached by every investors and enforcing the supervision and punishment on those agencies that release pseudo information.