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臺大管理論叢
第
27
卷第
2
期
155
structure reform began in April, 2005, we have separated our data into two periods based on
this date. The pre-reform period is between 2002 and 2005 while the post-reform period is
between 2006 and 2013. We have also filtered the sample by excluding financial firms,
restructured firms, firms without related party transactions, firms with missing data and firms
marked as receiving special or particular treatment. This leaves a total of 8,789 observations,
including 2,073 pre-reform observations and 6,716 post-reform observations. Panel Least
Squares regression is used to verify the hypotheses, and clustering the standard errors
suggested by Petersen (2009) is used to avoid biasing the results.
3. Findings
Our empirical results show that state-controlled firms carried out fewer related party
transactions compared to non-state-controlled firms after the split-share structure reform.
The reason could be that the controlling ownership of state-controlled firms has been diluted
so that the capital gains can be obtained by the controlling shareholders after the split-share
structure reform, which would contribute to fewer related party transactions. In addition,
firms controlled by the central government conducted fewer related party transactions than
firms controlled by the local government. We conjecture that firms controlled by the central
government are core businesses, which are of greater concern and would thus receive more
attention from mass media. Consequently, firms controlled by the central government have to
conduct fewer related party transactions to show a good example that the reform indeed
lessens the agency problem in Chinese listed firms. Furthermore, firms with a second-largest
shareholder carried out more related party transactions than firms without a second-largest
shareholder. The reason could be that the contestability of the second-largest shareholder has
decreased after the reform, leading to a decrease in the monitoring efficiency of the second-
largest shareholder. As a result, the second-largest shareholder turns to collude with the
controlling shareholders to pursue private benefits through related party transactions.
4. Research Limitations/Implications
Recently, as a consequence of immense economic growth, Chinese listed firms have
been experiencing an increased demand for funds. Even banks in Taiwan have been accessed
as one of their financing channels. For example, the offering of syndicated loans for
Sinosteel International Holding Company Ltd. has attracted twelve Taiwanese banks and
raised a total of 2.3 billion US dollars. However, for investors who are less aware of the