Anti-takeover Provisions and Investor Protection: Theoretical Model and Empirical Research

Abstract

Abstract:

The revision of "Guidelines on the Articles of Association of Listed Companies" in 2006 for the purpose of increase the autonomy of the articles of association is an important change in China's corporate governance system. The revision also provides an opportunity to study the effectiveness of the autonomy of articles of association. From the perspective of anti-takeover provisions of the articles of association, by factoring in the unique tunneling behavior of controlling shareholders in China to create a theoretical model, then based on data derived from China's A-share listed companies, our empirical studies examine the relationship between three typical anti-takeover provisions and investor protection. Results indicate that the establishment of anti-takeover provisions are conducive to a reduction in tunnelling by the controlling shareholder. Furthermore, it also plays an important role in protecting investors in the area of corporate governance within China. Further research finds that legal supervision and external audit, as two important external corporate governance mechanisms, show a certain degree of substitution effects between internal governance. In an environment of poorer legal supervision and lower external audit quality, the reduction in tunneling by anti-takeover provisions and the effect of internal governance is greater.

Key words: anti-takeover provisions, investor protection, articles of association of listed companies

Xu Jinhua, Li Shanmin, Zhang Dong, Chen Yugang. Anti-takeover Provisions and Investor Protection: Theoretical Model and Empirical Research[J]. , 2018, 30(7): 191-206.

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