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臺大管理論叢

27

卷第

2

157

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.