Abstract: Article 106 of the Company Law sets out that the formation of special resolutions follows the qualified majority rule, which means they are of effect after being approved by over two thirds of shareholders who attend the meeting. Therefore，when the major shareholder′s having reaches to one third, the major shareholder′s non-voting may equivalently veto any special resolutions proposed by other shareholders, in other words, the shareholder has the veto of special resolutions of the general meeting of shareholders. In this paper, data from year 2007-2014 in A-share are selected as samples, and the Sharp Regression Discontinuity is used to conduct quasi random experiment. On the basis of the effective control of the proportion of large shareholders and other factors on the impact of the agent cost, the influence of controlling shareholder′s veto of the special resolution on the cost of principal agent is investigated, and the endogenous problem is avoided. The results indicate that when the major shareholders′ having just over one third, and under the exogenous effect of “qualified majority rule”, the shareholder will obtain the veto power. This makes the agent cost significantly decreased by 2.9%-3.9%, and the agent efficiency is improved by 15.2%-26.2%. This means that the large shareholders have strengthened the control of the company because of the “veto”, and large shareholders have the “feeling” of having a company by controlling the company, that is, the level of the psychological ownership of the company has been improved, and the improvement of the level of psychological ownership makes the large shareholders more responsible, implementing more active supervision. In this way, the executive expense and the unnecessary cost of management are restrained, the efficiency of management is improved and the agency cost is reduced.

Key words: agent cost, veto of special resolutions, regression-discontinuity design, psychological ownership