Empirical Research On Fairness Of Income Distribution In Shareholders

As interests conflict aggravating between controlling shareholders and medium-small shareholders of listed companies in China, it has become the research focus in modern corporate governance that about the agency problem and the problem of income distribution which is fair or not in controlling shareholders and medium-small shareholders. It is the narrow income distribution which is referred to investors’ profit sharing by right of their holding shares. But the modern theories and empirical researches have shown that, besides profit sharing, the controlling shareholders also acquired extra and private profits by controlling companies’ strategies. The partial profits should also be regarded as the income distribution from companies’ profits. Grossman and Hart had put forward the word of “private benefits from control” first in 1988. It was the private benefits that controlling shareholders of listed companies acquired extra profits which others cannot by the right of controlling. Therefore, it becomes a research hotspot whether the private income the controlling shareholders getting in the enterprise management encroach on the company’s profit and on the medium-small shareholders’ dividends. Throughout the current theoretical and empirical researches, it is not comprehensive that most scholars used “control transfer premium” to measure “additional benefits from control”. The article holds that “additional benefits from control” should contain extra profits in the holding period and the time of transferring. Therefore, the article puts forward the word of “the broad additional benefits from control” and “generalized earnings per share”. It is explicit that extraneous income of controlling shareholder from controlling to the transfer belongs to the income distribution, then building and calculating the “generalized index of income distribution” between the controlling shareholders and medium-small shareholders. By combing with the principle of “same share, same benefit, same coequal”, and the principle of equity and equal distribution principle, analyzing the result of “generalized index of income distribution”, making the income violation degree from the control shareholders be absolutely clear in current listed companies. Aiming at how to limit extra profits from control and how to realize income distribution justice between the controlling shareholders and medium-small shareholders and then giving relevant policy suggestions, the article puts forward relevant policy suggestions that perfecting the company’s information disclosure system, reducing the medium-small shareholders’ cost of exercising the power, setting control shareholder voting rights limits, and then lowering the information gap, say gap and capital gap between the controlling shareholders and medium-small shareholders. And stressing that “generalized index of income distribution” should be mandatory disclosure in the annual report of listed companies, make the medium-small shareholders and potential stakeholders know clearly if the income distribution making fair or not between controlling shareholders and medium-small shareholders, and whether their receive dividends from listed companies have been diverted and its degree.