An evolutionary game analysis for internal corporate governance

The fundamental problem which corporate governance is committed to addressing between different ownership structures is different. This paper studies the expropriation problems resulted from concentration of ownership. Analyzing this problem with traditional game theory has some defects because of entirely rationality is a high requirement which is difficult to meet for the general decision makers. When the social economic environment and the decision problems are complicated, bounded rationality of people is very obvious. In the paper, it analyzes the evolutionary stability strategies and the replicator dynamics between controlling shareholders and minority shareholders. We confirms that cutting the minority shareholders' monitoring costs and the controlling shareholders' expropriation benefits will promote the company to improve internal governance.