The Tunneling of State-Owned Controlling Shareholders and the Incentive of Professional Manager in the Mixed Ownership Reform of Chinese
- 1 School of Economics and Finance, Chongqing University of Technology, Chongqing, China
- 2 School of Economics and Finance, Chongqing University of Technology, Chongqing, China
Abstract
This paper breaks through the relationship between the administrative appointment manager and the State-Owned controlling shareholders, through tak ing the professional managers with fairness preferences into the State-owned enterprises corporate governance framework. It finds that the equity incentive for the manager will not affect the tunneling behavior of state-owned controlling shareholders in the State-owned enterprise which is administrative, but the equity incentive for the Professional Managers with fairness preferences can restrain the tunneling of State-Owned controlling shareholders to a certain degree. And that a more perfect legal supervision can also restrain the tunneling of State-Owned controlling shareholders. Finally, main strategies for government were suggested, including developing professional manager market, establishing an institution of professional managers, establishing a fair and open competition environment in the market, and making a more perfect legal supervision.
- Huang, S.J. (2014) On the Mixed Ownership Reform of Chinese State Owned Enterprises. Economic Management Journal, No. 7, 1-10.
- Yang, H.Y. and Tong, L. (2015) On the Corporate Governance of State Owned Enterprises under the Reform of Mixed Ownership. Macroeconomics, No. 1, 42-51.
- Gao, M.H., Du, W.C., Tan, Y.N. and Su, R. (2014) Some Problems about the Development of the Mixed Ownership Enterprises. China Review of Political Economy, 5, 122-139.
- Berle, A.A. and Gardiner, C.M. (1932) The Modern Corporation and Private Property. Macmillan, New York, 3: 45.
- Jensen, M.C. and Meckling, W.H. (1976) Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
- Lopez de Silanes, F., Johnson, S., La Porta, R., et al. (2000) Tunneling. American Economic Review and Proceedings, 90, 22-27. https://doi.org/10.1257/aer.90.2.22
- Yu, M.G., Xia, X.P. and Wu, S.F. (2004) The New Trend of Corporate Governance Research—The Agency Problem between Controlling Shareholders and Small Shareholders. Foreign Economies and Management, No. 2, 28-32.
- Zhao, C.Y. (2005) Development of the Mixed Ownership and Literature Review. Reform of Economic System, No. 1, 48-53.
- Duan, Y., Wang, F.S. and Wang, Z.W. (2011) The Model of Board Structure on the Condition of Several Large Shareholders Existing. Nankai Business Review, No. 1, 54-64.
- Shi, S.P. (2010) Control Transfer, Excessive Control and Benefits Expropriation of Large Shareholder. Journal of Financial Research, No. 4, 160-176.
- Dyck, A. and Zingales, L. (2004) Private Benefits of Control: An International Comparison. Journal of Finance, No. 59, 537-600. https://doi.org/10.1111/j.1540-6261.2004.00642.x
- Huang, J.B., Xu, S. and Liu, D.C. (2013) Study on Double Principal-Agent Model Considering Equity Incentive Based on Fairness Preference Theory. Soft Science, 27, 124-129.
- Chen, W.Q. and Jia, S.H. (2015) Equity Incentive, Agency Costs and Corporate Performance—Based on the Analysis Framework of Double Principal-Agent Problem. Modern Economic Science, 37, 106-113.
- Zhou, R.J. and Gao, K.J. (2012) The Effect of Large Shareholder’s Control on Managers’ Ownership Incentive. Accounting Research, No. 5, 50-58.