An Analysis Of Large Shareholders Expropriation Based On Private Benefits Of Control

Under the concentrated ownership structure, the problem of private benefits of control which trigger the conflicting between the controlling shareholders and minority shareholders has become one of the focuses in the field of the company governance. For the control rights and ownership are separate, the controlling shareholders have motivations and abilities to seize more private benefits which only belong to themselves than the minority shareholders.The study of the controlling shareholders'appropriation and its relation with ownership structure and the company's financial position is significant to improve our corporate governance regime,optimize distribution of the company governance structure and protect the stockholder's equity for the present stage in theory and practice.Reasonable measure of private benefits of control is helpful to get the degree of major shareholders'deprivation,but it is impossible to explain the paradox reasonablely follow the traditional theories.Therefore, scholars who devide the private benefits of control admited that the private benefits were reasonable within certain limits and they made right explanations on that paradox. This article measured the expropriation degree based on a new framework after consulting the latest research at home and abroad, and analysed the relevant factors that affected the premium of control.This paper first chose 50 transiton cases happened in A stock market from 2005 to 2007 as samples,and devided the sample data into reasonable private benefits of control group and excessive private benefits of control group by using the Sustainable Growth Rate.The reasonable private benefits of control are reasonable compensation for large shareholders and they can be tolerated,accepted by minority shareholders,but private benefits in the samples of excessive private benefits of control group, include excessive private benefits of control that are expropriaton degree. After the calculation, we concluded that the expropriation in our country was about 27%.Then,this paper chose six factors as Scale. CR,Stock-balance,Return on equity,Financial leverage, Cash and short-term investments to analyse the influence on the premium of control.The conclusion was that with the growing of stock central rate, the large shareholders'expropriation was increasing. The ROE correlated positively with private benefits, that means with the growing of ROE,the large shareholders obtained higher private benefits.Financial leverage correlated obviously with private benefits level.That shows clearly, in china's enterprises, excessive asset-liability ratio induced the further expropriation. The company scale, the stock- balance correlated negtively with premium of control. The statistics of the company showed that the private benefits obtained by control rights declined with the increasing of the company scale.The stock-balance closely linked to private benefits. The higer proporation other stockholders owned, the stronger restraint the largest shareholders suffered,while there's no remarkable relation between cash and short-term investments and private benefits.So, in order to reduce the expropriation degree,we should not only improve corporate governance structure, combine measures of law with that of administration,but also deepen stock structure reform, try to develop a variety of investor, strenghten the stock- balance,establish a debt-restriction regime which make det financing operate,and pay attention to public opinion and the media by their publicity and monitoring.