An Empirical Study On Corporate Violation Motivations And Violation Behaviors

In recent years, it is not uncommon that listed companies broke laws. Shanghai StockExchange, Shenzhen Stock Exchange, China Security Regulatory Commission andMinistry of Finance of the People’s Republic of China investigated693violation listedcompanies from2007to2011. Such violation behaviors bring tremendous damage andserious loss to the capital market, investors and people all over the country. Therefore,preventing and restricting the listed companies in violation means a lot to the capitalmarket and investors.First, this thesis analysis on the basis of existing literature on violation behaviors ofthe listed companies deeply and divides violation behaviors into four types, includingunfair related transaction, inside trading, deregulation change of committed investmentproject and financial fraud. After research on each type of violation behavior of listedcompanies in-depth, this thesis finds out the violation motivations that cause the violationbehaviors and divides violation motivations into three types, including tunneling ofcontrolling shareholder, obtaining and maintaining the listing qualification and earningabnormal returns. Then research on each type of violation motivation in-depth. Finally,based on the sample of violation listed companies from2007to2011and usingcorrespondence analysis method, the study indicates that the controlling shareholder maxhis advantage by unfair related transaction which invade the interests of listed companies;management of corporations try to obtain and maintain their listing qualification, avoid ST,issue new shares of stock, allotment and other reasons of earning management by financialfraud in order to achieve the requirements of laws and regulations; the listed company andits internal staff, such as managers and other related people earn more return by insidetrading since they know more about the company.This thesis researches the relationship between violation behaviors and violationmotivations deeply. On the one hand, it helps investors to know more about thecharacteristics of violation behaviors and violation motivations of listed companies. On theother hand, it can warn the listed companies’ stakeholders to pay more attention to the companies they concerned.