The Evolutionary Analysis on the Expropriation of Large Shareholders on Minority Shareholders

Abstract

With the concentrated ownership in the emerging market universally, expropriation problem of large shareholders (controlling shareholders) on minority shareholders becomes the major concern of corporate governance. Shareholders are vast, heterogeneous and stochastic, which makes the use of classic game theory based on the hypothesis of perfect rationality restricted. Especially large shareholders and minority shareholders are not equal in their shares, capitals, information and capability. Based on the asymmetric aspect using evolutionary game analyzes shareholders’ behaviors and choice on supervision and expropriation, finds the steady equilibrium and furthermore explains the present situation that large shareholders take part in the supervision and expropriate minority shareholders’ rights and minority shareholders abandon their rights of supervision and protection. Research manifests the cost decides on if large shareholders expropriate minority shareholders and minority shareholders protect their rights actively and therefore provides ways to degrade lower normal cost of minority shareholder’s protecting right and expropriation earning of large shareholders to enhance protection of minority shareholder’s rights.