The Counterbalance Mechanism of Blockholders and the Effectiveness of Internal Control: A Case Study Based on the Listed Liquor Companies in China

Among the special environment of corporate governance in China, previous researches mainly focused on the concept of the internal control framework, and none of those studies considered the counterbalance mechanism of block holders as an important factor. Based on the case study of three listed liquor companies, and from the aspects of the characteristics of holding (counterbalance) shareholders and the effectiveness of the counterbalance, this paper analyzed the ways to improve the effectiveness of internal control mechanism in China´s listed companies. The research results show that if the actual controlling shareholders are state-controlled, the introduction of non-state-controlled shareholders who conduct counterbalance will achieve the optimum of internal control, but the internal control with the introduction of state-controlled shareholders who conduct counterbalance is only slightly better than the one with the high ownership concentration, and their effectiveness is not obvious.