The Impact Of Major Shareholders’ Control Rights Stability On Corporate Value

Since Berle and Means proposed the concept of professional managers,how to alleviate the conflict of interest between company owners and agents has become a long-term research focus.After long-term practice,the equity structure of large shareholders holding has been widely accepted.Under this structure,large shareholders exercise control and supervision rights to supervise and motivate agents,which can reduce agency conflicts and increase company value.However,when the stability of the control rights of large shareholders declines,even if the equity structure remains unchanged,the motivation for large shareholders to supervise agents will continue to decline,and eventually they may give up supervising agents,leading to a lack of supervision and higher agency costs for the company.In order to explore how the decline in the stability of control rights of large shareholders will reduce the company’s value creation ability from various aspects,this article conducts a case analysis of Shanghai RAAS,a former leader in the blood products industry.Taking the control right structure and company value creation theory as the main theoretical framework,this article first explores how the pledge behavior of large shareholders affects the stability of their control rights.Then it explores how the game situation between large shareholders and agents,corporate governance situation,performance performance,development strategy and other aspects change during the change process of large shareholder control right stability.Subsequently,it further analyzes how indicators such as the company’s real profitability,growth ability,and debt repayment ability change.Finally,it obtains the mechanism by which the stability of large shareholder control rights affects company value.The research conclusions obtained from this case analysis are:(1)The decline in the stability of large shareholder control rights will lead to a decline in motivation for large shareholders to implement supervision.Company agents can identify changes in their own supervision in sequential games with large shareholders and increase self-interested behavior as a result.This leads to a decline in the stability of internal governance structure and efficiency of internal governance.The agency costs faced by companies rise.(2)The decline in stability of large shareholder control rights will also lead to higher financing constraints and financing costs for companies.Business development and development strategies tend to decrease in the long term.(3)The decline in stability of large shareholder control rights will also cause external investors to lose confidence in the long-term development of enterprises.The valuation of companies decreases and information mining on company operations is reduced.This further weakens corporate governance.(4)The decline in stability of large shareholder control rights will have a negative impact on corporate profitability and return on net assets.(5)In order to reduce the negative impact brought by the decline in stability of large shareholder control rights,corresponding adjustments need to be made to internal governance structures and rules and regulations.External institutions such as securities regulatory agencies,various intermediaries,and independent directors should also play an important supervisory role.The innovations of this article are mainly: combining Shanghai RAAS’s business situation,stock price changes,restructuring behavior,macroenvironment changes to analyze large shareholder equity pledge behavior;using sequential game theory to analyze behavioral motivations of large shareholders and agents;using a dynamic perspective to compare Shanghai RAAS’s internal governance and financial indicators horizontally and vertically.