Research On The Effection Of Minority Investors On Corporate Performance

Minority investors play an important role in our country’s stock market. Theirinvestment relates directly to the sustainable development of the quoted company andstock market. In recent years, the minority investor protection problem has drawntremendous attention from both theoretical and practical areas all over the world. SinceChina’s stock market was established, there has the phenomenon of the interests of theminority investor being violated. So there is need to have further research about theprotection of minority investor, and analyze the necessary of it, to establish an indexsystem of minority investor protections. Being different from those researches whichdescribed the minority investor protection problem through the comparison from thelevel of nations, this paper revealed the relationship between the minority investorprotection and corporate performance from the microcosmic level of companies.First, this paper analyzed the status content and the reasons of current problems.Anglicizing the influence factors of internal governance mechanism in the company onminority investor protection, this paper established an index assessment system tomeasure minority investor protection in the level of companies from the aspects ofownership-structure; the board of directors; the board of supervisors; informationdisclosure; the minority investor themselves. This is an essential part in this paper.Second, we did the regression of the minority investor protection index, computed bythe previous part, and the corporate performance in order to exploit the relationshipbetween them. The result of the regressions indicated that the minority investorprotection in the company level has positive effect in the corporate performance. Atlast, this paper gave some suggestions in five aspects: ownership-structure; the boardof directors; the board of supervisors; information disclosure; the minority investorthemselves.Based on above, this paper concluded that there is difference in the minorityinvestor protection among companies. In fact, the minority investor protection in thecompany level reduces the agency cost and hence raises the corporate performance.