Right now I'm working on "ability to substitute" of controlling shareholder. I employ the Game theory, cooperative and non-cooperative game analysis to understand the importance of the "ability to substitute". If you are interested, let join and discuss.
The relations between stakeholders and
shareholders are very important for successful development of corporation. Without
any doubt, the stakeholders of a corporation are able to influence on the
corporation. But what could we say about control over corporation? Having in
mind that control over corporation means control over the cash flow; could we
state that the stakeholders have a minimal control, part of control, temporary
control, or joint control over the corporation? In other words can the
stakeholders control the cash flow of the company? We expect that this is can
happen if there is no active controlling shareholder. In our view, in every
game the most important and stunning is ability to exclude the other player
from the game. Therefore the major obstacle for stakeholders’ capacity to control
the corporation is ability of controlling shareholder to substitute the
stakeholders. The employee or director can be substituted for the same employee
or director. At the same time in public corporation the stakeholders can’t
substitute the shareholder for other shareholder.
We need to find the equilibrium between
controlling shareholder and stakeholders of corporation ability to influence on
corporation.
The appropriate balance of rights and
obligations in corporate governance enforced by law can prevent shareholders
from misuse of the ability to substitute and stakeholders from ability to
minimize the cash flow of the corporation.
In the ongoing research we view controlling
shareholder through prism of the Game Theory and discuss the controlling
shareholder’s rights.
We argue that the controlling shareholder
can directly or indirectly substitute any stakeholder for the other one with
the same profile.
The research is only the first step in
understanding the controlling shareholder ability to substitute. Our final goal
is to develop a model for estimation of stakeholder’s interactions and test the
various effects of the proposed legal rules on balance interest and harmonic
long term development of the corporation.
