TITLE:
The Tunneling of State-Owned Controlling Shareholders and the Incentive of Professional Manager in the Mixed Ownership Reform of Chinese
AUTHORS:
Chenyuan Zhao, Huan Peng
KEYWORDS:
The Mixed Ownership Reform of Chinese State Owned Enterprises, Principal-Agent, Equity Incentive, Fairness Preference, Tunneling of Controlling Shareholders
JOURNAL NAME:
Modern Economy,
Vol.9 No.11,
November
19,
2018
ABSTRACT: This paper breaks through the relationship between
the administrative appointment manager and the State-Owned controlling
shareholders, through taking 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.