Research On The Motives And Economic Consequences Of The Dispute Over Control Of Listed Companies

Since 2005,Chinese listed companies have successfully implemented the shareholding reform and the shareholding structure of listed companies has become progressively more diversified.Listed companies often need to raise external financing in order to strengthen their development,which will dilute the shares owned by the company’s founders and the company’s shareholding has become more fragmented,thus making it easier for financial capital to attack some quality listed companies,which in turn will lead to a battle for control of the company.The battle for control of Zhenxing Biochemical was the first time in the Chinese capital market that a listed company successfully gained control by way of a public tender offer.During the tender offer,the defending party took a series of measures to protect itself from the takeover: suspending trading to plan a major asset reorganisation,prosecuting the acquirer,introducing a "white knight",etc.The defender’s anti-takeover procedures incorporate a variety of anti-takeover techniques seen in the Chinese control market.This paper uses the literature review,case study and event analysis methods to provide an overview of the entire process of the control dispute,and to analyse the root causes and economic consequences of the dispute in terms of shareholding structure,corporate governance,market reaction and financial performance.The case studies presented in this paper show that a fragmented shareholder structure is a prerequisite for control contests.When a company’s shareholding is too fragmented and lax,then the listed company is likely to be invaded by external financial capital.Secondly,undervalued enterprises are also the main reason for control struggles.Undervalued enterprises indicate that they have more room for growth and value for investment,and it is important for foreign investors to gain control of listed companies in order to obtain quality resources and technical capital of listed companies.Once again,unsound corporate management system will also lead to the struggle for control,when a company has its own deficiencies in corporate governance,or when conflicts between the majority and minority shareholders of an enterprise over the management and strategic vision of the company continue to accumulate,it will escalate into a struggle for control.Ultimately,companies with poor financial performance are more likely to be contested for control and have poorer financial performance.The worse a company’s financial performance,the more likely it is to be targeted and control will be transferred.And it is more likely to be the target of a battle for control than a financially performing company.Based on the findings of the study,This thesis makes the following recommendations: First of all,listed companies should establish a scientific and reasonable shareholding structure and further optimise the allocation of control rights.Secondly,to truly reflect corporate value and maintain maximum corporate value.Thirdly,the corporate governance system should be improved and the system of corporate governance rules should be sound.Lastly,to enhance the operational capability of enterprises and optimise their performance.