The Influence Of The Reduction Of Large Shareholders On The Second Agency Problems Of Listed Companies

Shares concentration of the listed companies has been higher in China,the"only large shareholder" phenomenon is particularly serious.Because large shareholders occupy the dominant position in the corporate development and governance,large shareholders use the control position for personal gain,against the interests of small shareholders and listed companies,which are common occurrences.It leads that the second agency problem,that is,the agency problem between large and small shareholders,is more serious.Among them,large shareholders use the internal information and select the most favorable opportunity to reduce the holdings of shares has become an important form of profit,which accused by market and media.It is a common concern of all parties and regulators that how to restrain large shareholders' reduction through more effective market restraint and supervision means to protect the interests of minority shareholders and listed companies.However,every coin has two sides.Because of the low governance efficiency of Listed Companies in China is largely due to the "the only large shareholder" and the internal control.So the reduction of shareholdings of large shareholders may damage the interests of small shareholders at the same time,objectively which is also may weaken the control status of large shareholders and strengthen small shareholders and management and other status in the corporate governance.So it is possible to ease the second agency problems and improve the internal corporate governance effect.Only by understanding and revealling the influence of the reduction of large shareholders,can correctly formulate and implement more reasonable supervision and regulation measures,and constantly improve the corporate governance,effectively protect the interests of small investors.It is along this line of thinking that this paper empirically studies the influence of the reduction of large shareholders on the second agency problems of listed companies,and further explores the effects of different controlling shareholders on their reduction effect.This paper uses the event study method to analyze and research the reduction of large shareholders from 2010 to 2015 influence on second agency problems of short-term,medium-term and long-term effects,that is,1 years,3 years,5 years after each reduction event of large shareholders,research the change of second agency problems.On the basis of the full sample regression,based on the control degree of large shareholders this paper divided three sub groups inc.strong control sample group,weak control sample group and medium control sample group to further study different control degrees influence the difference in reduction effect.In order to make the empirical results more robust,we use the related transaction volume instead of other receivables as the tunnel proxy variable to regression again.In order to eliminate the endogeneity problem may exist,we use the instrumental variables method to futher test the conclusion of this paper.Besides,similar industry and size and no reduction of large shareholders listed companies is composed of paired samples for the regression.We use these three methods for the robustness test in order to make the empirical results more reliable.Through empirical research,this paper gets two main conclusions:Firstly,after the reduction of large shareholders,the second agency problems of listed companies have been alleviated and the internal governance of the company has been improved.Secondly,compared to large shareholders with higer proportion shareholding and lower proportion shareholding of listed companies,it is the medium proportion shareholding sample group after reduction of large shareholders that alleviate the second agency problem and improve the internal corporate governance,which will have a more significant effect.The innovation of this paper lies in the previous research about the reduction of large shareholders tend to revolve around the adverse effects of destroying the stability of the capital market,short the stock,invade the interests of listed companies and small shareholders and so on.This paper attempts from a new perspective to reseach positive effects of reduction of large shareholders on internal corporate governance,which enrich the reduction of large shareholders effect on internal corporate governance,and break the past habitual thinking by market parties about the large shareholders reduction.In addition,this kind of thinking breakthrough is a more effective way to exam the behavior of large shareholders,to protect the interests of small investors and provides a new idea for regulators,investors and practitioners a new perspective to re-examine the reduction of large shareholders.This research conclusions of this paper have enlightening and referential significance for the theoretical and practical circles to deeply cognize and understand the influence of the controlling position of large shareholders on corporate governance.