| The second agency problem is very serious in the capital market of our country. The controlling shareholders always tunnel the listed companies and get benefit for person by making related transactions, especially the related operating transactions. This behaviors increase the conflict between the control shareholder and the small investors. The related operating transactions mean the operating transactions and the offering or receiving labor services between the related parties. Based on different purpose, controllers’ related operating transactions may show the ’tunneling’ or the ’supporting’ to listed companies. The related operating transactions which based on the purpose of tunneling have harmed the interests of the small and medium investors. What’s more, the controlling shareholders want to cover up the essential of capital occupation by related operating transactions and lots of theories and practices have proved that related transactions are always made as a tool to get personal interests by controlling shareholders. You can imagine that the related operating transactions which based on the purpose of supporting hardly ever occur. Because the laws in China are becoming more and stricter, controlling shareholders’ direct tunneling have been controlled in a way, but the related operating transaction has become the controlling shareholders’ tools to tunnel because of its complexity and hiding, especially in manufacturing industry. The related operating transactions not only harm the interests of small and medium investors, but also block the healthy development of listed companies.The institutional investors’ rapid development and extensive investing have improved the level of the corporate governance, and the institutionalization of equity structure in west countries’ listed companies offers us a new method to reduce the second agency problems and improve the level of the corporate governance in our country. In recent years, the institutional investors developed very quickly in China and the government showed a positive attitude to institutional investors. What’s more, the government has published many new policies in order to encourage the development of institutional investors in our country. In 2002, the ’avoid voting system’ cleared away of obstacles for small and medium investors including institutional investors and then they could make their voices heard in the corporate governance. With the advantage of abundant capital, the advantage of professional ability, the advantage of information acquisition, and facing the controlling shareholders’ tunneling behaviors, can the institutional investors check and limit the related operating transactions in order to protect the interests of small investors?Based on that question, this paper puts the related operating transactions whose purpose are tunneling as the breakthrough point, and then makes the theory analysis and empirical study in order to research the effects of institutional investors on related operating transactions. After generalizing the existing literatures at home and abroad and based on the economic system background, this paper uses the principal-agent theory to prove that the institutional investors are equipped with the ability to supervise the controllers’ behaviors because of their advantage of profession and information, and then uses the corporate governance theory to prove that as a kind of governance system the institutional investors are equipped with the motivation to supervise the controllers’ behaviors. In the meanwhile, this paper builds a static game of incomplete information model about the relationship between the institutional investors and the controllers. With the game model, this paper concludes that the size of the stake plays an important role in corporate governance for institutional investors. On this basis, this paper puts up three hypotheses from several aspects about the institutional investor entirety’s size of the stake, the large institutional investors’ size of the stake and the character of institutional investors. After that, this paper selects manufacturing companies of A shares listed in Shanghai and Shenzhen stock markets from 2009 to 2013 as the sample to do the empirical research. The empirical findings show as follows:(1) The institutional investor entirety can balance controllers’ related operating transactions because of the ’avoid voting system’, and the institutional investor entirety play a positive role in corporate governance and they protect the interests of small investors. What’s more, the higher the stake, the more positive effects of the institutional investor entirety has. (2) Because of their weaker stock-share power, the large institutional investors can’t have the ability of supervision and lack the motivation of supervision, and then the large institutional investors can’t balance the controlling shareholders’ tunnel behaviors effectively. (3) Institutional investors with different characters always play different role in corporate governance, and the independent institutional investors can balance controllers’ related operating transactions efficiently while the non-independent can’t. Thank to the independent institutional investors, the institutional investor entirety can balance controllers’ related operating transactions in China. This paper suggests that our country should relax the restrictions of institutional investors’ proportion of shareholding and promote the reform of the mixed ownership of economy in order to balance controllers’ tunnel behavior and improve the level of corporate governance.The innovation is that this research is based on the situation which the second agency problem is very serious in our country, and combining the ’avoid voting system’ reveals the way of supervision for institutional investors. About the research method, this paper establishes simultaneous equations in order to control the endogenous questions. This makes the results become more steady. |
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