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Since the establishment of China\
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Submitted On: 04-01-2010 | Views:
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Since the establishment of China's first stock------FEILO ACOUSTICS CO., LTD. SHANGHAI in November 1984, China's security market has developed for 23 years, and made tremendous achievements. However, some institutional shortcomings exit in it. Due to the special historical reasons, the non-circulation and circulating shares formed, which are of different nature, and caused a phenomenon known as share splitting that are no equal price and no equal right. Share splitting seriously distorts the price formation mechanisms of stock market, and restricts the healthy development of capital markets, and more important, it impacts the corporate governance efficiency of listed companies. That is, if share splitting remains unsolved, then any seeks to improve corporate governance efficiency and enhance corporate value is tantamount to catching fish in the tree. On 29th April 2005, China Securities Regulatory Commission published Notice of the China Securities Regulatory Commission on Piloting the Share-trading Reform of Listed Companies, and announced to initiate the Share Splitting Reform. In fact, Share Splitting Reform is the re-demarcation process of interests between the non-circulation and circulating shares, which will nurture a healthy stock market and promote the formation of the whole market mechanism. The 64th list of Share Splitting Reform was announced before December 30, 2006, and only 40 companies in Shenzhen and Shanghai stock market did not enter the process of Share Splitting Reform, which marks the Share Splitting Reform has been drawing to a close. This paper is to study the effect of Share Splitting Reform on corporate governance of listed company in this historical background.This paper first analyzes the relevance of capital structure and corporate governance, and believes the shareholding structure is the basis of corporate governance for its decision on the entire company's constitution and operation of internal governance mechanisms. The capital structure is an important part of corporate governance, and it can coordinate the interest behaviors between the investors and operators, and internal shareholders of investors and creditors through exerting the common action of shareholding and claims and their rational allocation. The second part studies that the Share Splitting Reform can improve the shareholding structure of China's Listed Companies from theoretical point of view. The third part selected 72 listed companies of the first and second batch of share reform announced in September 2005 as research objects, the reforms of which have completed for more than 2 years. The sale limitation of circulating shares was gradually lifted, and the effect of share reform began to show basically. Use the multivariate regression to do the small-scale empirical research on the 50 valid samples.From the empirical conclusions, Share Splitting Reform has promoted the improvement of corporate governance efficiency. Meanwhile, this paper also gives some suggestions for the problems that still exited after Share Splitting Reform to perfect the governance situation of listed companies in China and meet the coming of full circulation age.
Article Source:
http://latest-finance-articles.com/Security/Share-Splitting-Reform-and-Corporate-Governance-1264.html
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