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臺大管理論叢
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through the changes in the ownership structure.
This study thus fills a gap in the literature by examining whether country-level
institutional reform can hamper the expropriation of the controlling shareholder, and whether
the monitoring ability of the second-largest shareholder can be enhanced by the reform. In
addition, we extend the work of Cheung et al. (2010) to examine the motivation for related
party transactions in non-state-controlled firms, including the controlling shareholders who
are domestic legal persons and foreign legal persons. Last but not least, few studies have
focused on the relationship between the second-largest shareholder and related party
transactions. Liu et al. (2014) argued that the power of large shareholders other than the
controlling shareholders can efficiently reduce the expropriation through related party
transactions. However, their sample only included data from the post-reform period between
2008 and 2010, neglecting the difference analysis between the two periods. In the pre-reform
period, the government held a high proportion of non-tradable shares, and the ability and
motivation of the second-largest shareholder was weak. After the split-share structure
reform, the second-largest shareholder is able to purchase released shares to enhance their
power against the controlling shareholders. In their examination of stock market volatilities
between the pre- and post-reform periods, Lo et al. (2012) found that investors were easily
affected by government policies before the reform, but became more rational after the
reform. Therefore, considering cases where the second-largest shareholder is an important
corporate governance mechanism, split-share structure reform in China has offered a rare
platform to examine the behavior of the second-largest shareholder, and this study
complements this line of thought in the literature.