What Is The Role Of The Second Largest Shareholder In Corporate Governance?

Since1932, Berle and means issued<The modern corporation and private property>, there have been a lot of research and papers about the ownership structure and corporate governance, which experienced the transformation from concentration of equity to equity type and equity relationship, from the first agency problem to the second agency problem.This paper reviewed the domestic and overseas researches about ownership structure and corporate governance, summarized the change of these researches’logic and focus. Explicated the key governance problem of modern corporate and the reform of state-owned-corporate in our country, based on the theory analysis, made the empirical research. Firstly, this paper stated the relationship between owner structure and corporate governance, and cleared the driving factors of owner structure. Secondly, starting from the owners’relationship, tried to find the counter balance role that the second largest shareholder played in corporate governance. During this research, we paid a high intention on the institutional investors as the second largest shareholder. In the end, we suggested the available solution to the problem of corporate governance and state-owned-corporate reform.This paper empirically researched the manufacturing companies listing in small and medium board during2008and2010and find that the share of the second largest shareholder has a positive correlation with corporate performance, and furtherly the counter balance role of the second largest shareholder also positively correlated with corporate performance. But for the limitation of ability and shortage of market system, the institutional investor as the second largest shareholder didn’t improve the corporate performance. In addition, the share of second largest shareholder decreased the corporate performance in state-owned companies.