Split-share Structure Reform's Effect On Agency Costs

In the context of split-share structure system, non-tradable shareholders and tradable shareholders'basic interest is inconsistent. In order to make its own interest maximize, non-tradable shareholders may invade and occupy tradable shareholders'benefit. Split-share structure reform is to solve long-standing non-tradable shares and tradable shares'issue. By paying the right price to tradable shareholders, non-tradable shares can change to tradable shares, Theory speaking, the non-tradable and tradable shareholders have the same basic of interest, so the agency cost between the non-tradable and tradable can decrease.As the theory said, when the agency cost is small, the incentive mechanism would be better and the monitor mechanism would be worse than when the agency is big. Therefore, We can indirectly infer the changes of agency costs by studying the change of incentive mechanism and monitor mechanism in the completed and uncompleted reform listed companies. This indirect method offers a new perspective for studying the changes of agency costs.The empirical study found that the completed reform corporation's management equity incentive's effect has no significant change, while board's holding, independent director system and the board of supervisors system of the monitor system has significant change. From the effects of changes in the monitor mechanisms, it can be inferred indirectly that the split-share structure reform decrease the agency cost and improve firms'performance.