Can Major Shareholder Reductions Improve Corporate Governance?

Since the split share structure reform,China's capital market has developed rapidly and achieved many brilliant achievements,but many problems have also been exposed in it,and the reduction of major shareholders is one of the focuses.In 2005,the China Securities Regulatory Commission issued the “Notice Concerning the Pilot Issues in the Reform of the Share Merger Reform of Listed Companies”,and the behavior of major shareholders' reductions has been increasingly exposed to the public eye.With the promulgation of a series of other securities reduction policies of the Securities and Futures Commission,large shareholders took the opportunity to sell and lift banned stocks on a large scale,which brought great pressure on the confidence of the capital market and the company's stock price.And the issue of major shareholder reductions has also received more and more attention.Although there is a certain negative impact on the reduction of major shareholder,there are always two sides to the development of things.In China's listed companies,the situation of "one-dominated company" is very common,and the "one-dominated company" and insider control have greatly affected the corporate governance efficiency of listed companies in China,making the level of corporate governance relatively low.The reduction of holdings by major shareholders may harm the interests of small and medium shareholders,and will also further reduce the concentration of the company's equity,alleviate the phenomenon of "one dominant share",and weaken the absolute controlling position of major shareholders.At the same time,after the major shareholders reduce their holdings,the entry of other major shareholders can also check and balance with the original controlling shareholders in equity and power,which strengthens the ability of other stakeholders to check and balance major shareholders in corporate governance,and thus may improve corporate governance.Level,thereby mitigating the effects of the second type of agency problems to a certain extent.Can large shareholders reduce their holdings to improve corporate governance and thus ease the second type of agency problem? This is exactly the problem that this article mainly studies.Along this line of thought,this article takes the private listed company Tianlong Group as a case company,and makes a more detailed analysis and discussion of the impact of major shareholder reductions on changes in corporate governance levels.Related policy recommendations.This article mainly adopts literature research method,case analysis method andcomparative research method to study case companies.The article first reads relevant literature on major shareholder reductions and corporate governance research at home and abroad,combs existing research on major shareholder reductions and corporate governance evaluation methods,and provides theoretical basis and reference for the study of this article.Stage and research direction.Secondly,by comparing various types of corporate governance evaluation systems,and drawing on the existing system,we select and determine the appropriate corporate governance evaluation system indicators for Tianlong Group.In the process of evaluation and analysis of the specific corporate governance level,the changes in the corporate governance level of Tianlong Group during the reduction of major shareholders' holdings were analyzed,and the company's financial performance was analyzed.Impact of governance efficiency.The article finds that after major shareholders reduce their holdings,other large stocks enter into a balance of equity.The company can adjust the power structure of the board of directors,improve the professional competence and operating efficiency of the board of directors,and increase the participation of shareholders' meetings to make the corporate governance level in the short term.There has been some improvement within the company,and the company's financial performance has improved,but it has shown volatility in the long run.Finally,according to the analysis conclusions of the article,relevant policy suggestions are put forward for the problems existing in the process of reducing shareholder holdings.