How to help publicly listed companies say goodbye to "lying flat" and start running again

Why is AI and M&A strategy so difficult to shake the “lying flat” phenomenon in A-shares?

At the recent Boao Asia Forum 2026 Annual Meeting, the “lying flat” phenomenon among certain listed companies drew the attention of attending experts. For example, some experts mentioned: “In the Chinese market, there’s a problem—once a company is listed, it becomes a done deal, and the company ‘lies flat.’ Founders go from a few million yuan in net worth to tens of billions. As long as they don’t violate regulatory red lines, commit financial fraud, false information disclosure, or insider trading, it’s okay to do nothing.”

Regarding this “lying flat” phenomenon among listed companies, some experts offered prescriptions: emphasize mergers and acquisitions. They believe that one important reason for the “lying flat” attitude is the lack of pressure brought by M&A. If a company faces the risk of losing control, management must operate cautiously and focus more on creating value for shareholders.

Experts’ concern about the “lying flat” phenomenon among listed companies is a good thing. However, the prescriptions they suggest are clearly not targeted at the root problem and cannot cure the “lying flat” issue in China’s A-share market. Although in foreign markets, M&A can lead to changes in control rights, forcing management to work harder to create value for shareholders, in the domestic market, many listed companies are not worried about losing control.

On one hand, the controlling shareholders of listed companies hold a high proportion of shares—many have over 51%, some even over 70%. They are not worried about M&A causing a change in control. If they don’t want to sell, they can veto any deal with a single vote.

On the other hand, M&A in China’s A-share market usually involves listed companies acquiring other companies. After all, the ultimate buyer of these acquisitions is the secondary market, so listed companies are not short of money and are willing to spend freely on acquisitions. As for what kind of shareholders to introduce, that is also decided by the controlling shareholders. If the controlling shareholders themselves are unwilling to exit, no one can force them to do so.

Furthermore, the reason listed companies are not worried about control rights changing hands is that many controlling shareholders are indifferent to control. These shareholders go to great lengths to get their companies listed mainly to reduce holdings and cash out. As long as they can fully sell their shares and cash out, they can become billionaires or even hundred-billionaires. This allows controlling shareholders to relax and “lie flat” even more. If someone seeks control of the company, that might be exactly what the controlling shareholders desire.

Therefore, simply using M&A to make listed companies stop “lying flat” is clearly ineffective—this is a result of some experts not understanding the realities of China’s capital market. In fact, to help listed companies shed their “lying flat” attitude and even start running, creating more value for shareholders, two approaches can be considered.

First, improve the equity structure of listed companies by limiting the controlling shareholders’ shareholding ratio to no more than 30%. Such a shareholding ratio would constantly remind controlling shareholders of the risk of losing control, encouraging them not to sell lightly. Instead, they would be motivated to create more value for shareholders and gain their support, thereby consolidating their control.

Second, improve the shareholder reduction system by linking original shareholders’ share reductions with the returns provided to public investors (including cash dividends and cancellation-based buybacks). If the returns to public investors exceed the company’s financing amount (including IPO and refinancing funds), the original shareholders can reduce their holdings. The amount they cash out cannot exceed the difference between the returns given to public investors and the company’s financing amount.

In this way, listed companies would need to provide more returns to the public investors and reduce reliance on “money-raising” financing from the market. Only then can the original shareholders, including controlling shareholders, start reducing their holdings early and cashing out more. If this is achieved, listed companies and controlling shareholders would naturally be less inclined to “lie flat” and would instead strive to move forward, maximizing returns to the public investors.

Author’s note: These are personal opinions and for reference only.