An Empirical Study on Legal Protection of Minority Shareholders and Private Benefits of Control in China

This paper examines whether the legal system can effectively protect minority shareholders in China,by sampling 951 transactions of untradeble shares in Shenzhen and Shanghai Stock Exchange during the 1994 to 2003 period.The empirical results show:①there exist significant private benefits of control in the listed companies in China,and the levels of private benefit at the different periods of legal investor protection are significantly different from each other.②as the level of legal investor protection improves,the private benefits of control decrease.③in the 1994 to 1998 period,with poor legal investor protection,legal investor protection does not significantly affect private benefits of control.However,after 2000,legal investor protection begins to play its role in curbing the controlling shareholders' ability to get private benefits of control.