An Empirical Study On Exploitive Related Party M&A Of Chinese Listed Companies

Controlling shareholders usually make use of related party M&A to carry out popping or tunneling from listed companies. Basing the sample of the exploitive related party M&A, this article investigates the prohibitive effect which the corporate governance have on the related party M&A. Good corporate governance has prohibitive effect on the exploitive related party M&A. Less local government control and better governance environment are the foundation and the precondition of good corporate governance. Though the construction of corporate governance is in favor of prohibiting the exploitive related party M&A, less local government control and better governance environment are essential measures to it. This paper was divided into five chapters:The first chapter is the literature about"expropriation". Expropriation takes place in both centralized share holding structure and Share Decentralization structure. There are controversies about which kinds of related party transactions are exploitive. After analyzing the related literature, this article decides to research the exploitive related party M&A.The second chapter is about the institutional background of our country's related party M&A. In the process of the development of our security market, popping related party M&A belongs definite phases, but exploitive related party M&A exists in the whole course of China listed companies'development. The influence of local government is an important reason of exploitive related M&A.The third chapter brings forward three hypotheses of the influences of corporate governance on exploitive related M&A: corporate governance could prohibit the exploitive related party M&A and this is influenced by the control of local government and the standard of governance environment. In the companies which are not controlled by local government or the companies which are situated in better good governance environment, corporate governance play a more obviously part in prohibiting the exploitive related M&A. The fourth chapter uses the sample of the listed companies in which the related party M&A happened and the companies in which no important related party transactions happened in 2001-2003 to establish logit equation to test our three hypotheses.The fifth chapter draws the conclusion of this article: though corporate governance have effective prohibitive effect on the exploitive related party M&A, but this effect need the support of two main factors——less local government control and better governance environment. At present the reduction of local government control is more important than the enhancement of governance environment in prohibiting the exploitive related party M&A.