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The Research Based On Ownership Structure Of Corporate Governance Of China's Private Listed Companies

Posted on:2009-10-17Degree:DoctorType:Dissertation
Country:ChinaCandidate:T Y ZhangFull Text:PDF
GTID:1119360272981183Subject:Financial management
Abstract/Summary:PDF Full Text Request
The private enterprises have grown up gradually and developed greatly over the past 20 years after reform and opening up, especially since Chinese market-oriented reform policy was adopted in the 1980s. More and more private enterprises have been or are being listed in Chinese or abroad securities markets after restructuring themselves, which is an important factor for boosting the development of Chinese economy and securities markets.In the current background of"the withdrawal of stated-owned companies and the entry of private ones into some particular fields", the status of the private listed companies in Chinese securities market will become more and more important. At present, the main feature of listed companies'governance structure in China is large shareholders'controlling. Comparing private listed companies with non-private listed companies on the ownership and controlling structure, we can see that the concentration of stock equity and the degree of the separation of ownership and controlling is much higher and there is also a phenomenon of"predominant of one large shareholder"in private listed companies, and the ultimate controllers may use the pyramid-controlling structure to enlarge its controlling rights layer by layer and control shares of more enterprises with limited investment. From the mechanism of internal governing, it is more obvious that private listed companies are governed by family or key man, and it is common phenomenon that the large shareholders encroach on the interests of small shareholders. From the internal control and management of financial risks, the ultimate controllers usually go their own way surpassing the limit of internal control, and there is no mechanism of internal control and management of financial risks, which causes more internal control and financial risks in the private listed companies. From the point of information disclosure, the act of illegally disclosing information in the private listed companies is much more serious than that in the non-private listed companies in the whole. The mentioned- above cases lead to the deterioration of private listed companies'performance, which has restricted the process of Chinese enterprises'privatization reform smoothly and hindered the healthy development of Chinese security market.For the above problems, on the basis of Marxist economics, the new institutional economics, property rights economics and the theories of enterprise and financial management, this paper does research on the relationship between stock equity structure of listed companies and corporate governance in the way of combination of normative and empirical analysis, qualitative and quantitative analysis, comparing and synthesis analysis, theoretical and case-study analysis. First, this paper explains the basic theories of corporate governance and demonstrates that the inherent logic relationship between the property, the stock equity structure and the corporate governance, i.e. the property right system instructs and the standard enterprises' property right arrangement, which forms the stock equity structure of enterprise and then decides the companies'governance structure and influences the mechanism and performances of the company governance. And on this basis, the author analyses the characteristics of stock equity structure and controlling way of private listed companies in China and the impacts of corporate governance mechanism, explores the key problems that private listed companies is facing and pointes out the direction of reformation of private listed corporate governance. Then the author presents the effects of the different stock entity structure and controlling ways on the value of private listed companies and makes an empirical test on the relationship between stock equity structure and the value of company. The author also discusses the relationship between the governance mechanisms and financial management (inner control, financial risks management and the disclosure of accounting information) of private listed corporate in China, figures out the problems of financial management and presents the solutions to financial management in private listed companies. Finally, the author draws out a blueprint for improving the governance mechanisms of private listed corporate in China. With all the study the author concludes that the stock equity structure and the ways of controlling are the important factors which determine the efficiency of the corporate governance. The pyramid control structure of Chinese private listed companies makes predominant large shareholders'tunneling the wealth of listed companies more secret, which has increased the difficulties of corporate governance and lowered the efficiency of corporate governance. The core issue of private listed corporate governance in China is the key substitution between controlling shareholders and small shareholders. In this imperfect legal system and the external lax supervision circumstances, the controlling shareholder will make use of its right of control to seek private gains while seizing the interests of small shareholders and lowering the company's value. The author also finds that the highly concentrated ownership structure of private listed companies in China and deviation from ownership to controlling rights is bad to the value of companies: the higher degree of separation between ownership and control, the stronger motive of controlling shareholder to gain the income of controlling and the greater harm to the interests of small shareholders. The perfect inner governance mechanisms, financial risks management and effective information disclosure system are the vital factors that are the safeguard mechanism for realizing the objectives of the companies. However, nowadays, the facts in our private listed companies are that inner governance mechanisms, financial risks management and information disclosure system are not perfect and the operating environment are not good with many serious potential risks.For the above-mentioned problems in our private listed companies, the author figures out that in order to improve governance structure and efficiency of the private listed companies in China, it is necessary to optimize the internal governance structure, perfect the external supervision mechanism and strengthen the participation governance of benefit counterparts. First of all, in order to improve the internal governance structure, it is necessary to optimize the property rights and controlling structure, perfect the board of directors system and the general meeting of shareholders system, strengthen the internal governance mechanism, build up the internal governance culture and improve internal governance environment. Secondly, perfecting external governance mechanism refers to the improvement of the competition mechanism for the controlling rights of our private listed companies, the cultivation of a market for professional managers and the perfect of the withdrawal mechanism for delisted companies. Finally, strengthening the participation governance of benefit counterparts means enhancing and fully playing the governance function of organization investors, consolidating the government's legal supervision, perfecting and enhancing the legal system for protecting investors and medium and small shareholders and adopting the investor relations management so as to realize information symmetry between companies and investors and improve the governance of the managerial levels of corporation.For the content and structure, this paper is made of seven chapters and can be divided into four parts: the first part is the introduction which presents the background information, research significance and the research methods, structure of the paper and the innovation and insufficiency of this paper. The second part includes the first 2 chapters. The first chapter presents the basic theory of the connotation of company governance, the company governance mechanism and the theory basis of company governance and so on. The second chapter, on the basis of the new institutional economics, property rights economics, corporate finance theory, and modern corporate theory, demonstrates the inherent logic relationship between the property, stock equity structure and corporate governance, shows, the basis theory of this paper, that the property is the basic factor which determines the performance of corporate governance. The third part, the main body of this paper, contains the third, fourth and fifth chapters. The third chapter makes theoretical analysis and empirical research on the stock equity structure and the ways of governance of the private listed companies, reveals the impact of the characteristics of stock equity structure and the governance ways in Chinese private listed companies. The fourth chapter analyses the impact of the minority ownership control structure and the private income of controlling shareholder control to the value of company, proves the impact of stock equity structure and the pyramid control structure in Chinese private listed companies to corporate performance on the basis of empirical data of Chinese private listed companies. The research shows that the pyramid control structure of Chinese private listed companies enhances predominant large shareholders'activities of tunneling the wealth of listed companies. The separation between the claiming right of cash flow and controlling right of Chinese private listed companies is bad to the value of the companies: the higher the above-mentioned separation, the lower the value of the companies. The fifth chapter studies the effects of corporate governance mechanism on inner controlling, financial risks management and accounting information disclosure, figures out the problems of inner controlling, financial risks management and accounting information disclosure in the operational mechanism and environment by the method of case-study, and then discusses the solution to the above- mentioned problems. The sixth chapter, also the fourth part of the paper, draws out the system design for improving the corporate governance in our private listed companies on the basis of the impact of stock equity structure and controlling ways on corporate governance mechanism, the value of company and financial management.This paper attempts to carry out the innovations in the following aspects:1. Based on the basic theories and empirical studies in corporate governance, this paper is to show that the key issue of the corporate governance of Chinese private listed companies is the agency problem between the controlling shareholder and medium-sized shareholders rather than supervising managers, through theoretical analysis and empirical testing. This may represent the current approach of corporate governance reform of Chinese private listed companies and the developing trends in theoretical research.2. According to the theory of controlling return developed by Grossman and Hart (1988), this paper is to study the conditions that the ultimate control of Chinese private listed companies grab the private return of controlling rights, demonstrate the relationship between the behavior the ultimate control of Chinese private listed companies grabbing the private return of controlling rights and the efficiency of corporate governance , thereby propose that it is necessary to make strict legal system to limit the return of controlling rights that is the systematical guarantee to improve corporate governance efficiency of Chinese private listed companies. These research methods are quite innovative.3. The author takes the 196 listed companies in the Shanghai and Shenzhen securities markets before 2005, whose ultimate controllers are private companies according to the annual reports, for sample, and empirically tests the relationship between controlling minority structure of Chinese private listed companies and the value of the company. The author not only finds out that the separation from controlling rights and the ownership of cash flow is bad to the value of company but also shows that ownership of cash flow ratio of ultimate controlling and the value of company have significant negative correlation, which proves indirectly that the behavior the controlling shareholder of Chinese private public companies plunder resources and the benefits tunneling to exhaust the public companies are more serious.4. This paper is to study the defects and effects of inner controlling, financial risks management and accounting information disclosure in our Chinese private listed companies, which shall develop a new research field on the private listed companies'governance in China.5. This paper is to prove systematically the inherent logic relationship between the stock equity structure and corporate governance of Chinese private listed companies and put forward the system arrangement of perfecting Chinese private listed companies'governance from the perspective of optimizing the internal governance structure, perfecting the external supervision mechanism and strengthening the participation governance of benefit counterparts. Thus the study of Chinese private listed companies is systematic and comprehensive.6. This paper is to discuss the concept of"ultimate owners"adopted in the relevant laws and regulations, which is of great reference value for enhancement the securities market supervising and further improvement of governance mechanisms in private listed companies.7. On the logic basis of property right--stock right--corporation property right-- managerial right, this paper is to expound systematically the inner logic relationship between property rights system, stock equity structure and corporate governance, discuss the theoretical foundation for the governance of private listed companies in China, and figure out"principal-agent theory","the theory of incomplete contract"and"property right theory"are the base for our private listed companies'governance. The author also believe that"principal-agent"is the core issue for our private listed companies'governance, and the participation governance of benefit counterparts is the inevitable factor for improving our private listed companies'governance, which shall to a great extend perfect the theories of private listed companies'governance.
Keywords/Search Tags:private listed companies, stock equity structure, controlling ways governance mechanisms, value of companies, financial management
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