Research On Private Benefits Of Control In Corporate Control Transfer

The traditional theory of the market for corporate control lays particular emphasis on effect on the corporate performance caused by the control transfer. Recently, the research proves that most countries possess a lot of corporates of concentrated ownership structure, meanwile America of having many firms of disperse ownership structure has some enterprises of concentrated ownership structure. For this reason, the controlling shareholders can obtain the sharing benefits and their private benefits brought by the corporate control. Hence, how to estimate the amount of private benefits of control and protect monority shareholders has gradually become a centerpiece of the recent literature, both theoretically and empirically. As for the imperfection of the market competition, the premium method of the corporate control transaction actually under estimates the level of the controlling shareholders' private benefits.In consideration of this, we combine the traditional theory of the market for corporate control and the research on the private benefits of control together, and under the frame of the sharing benefits and private benefits of control, we make research theoretically and empirically.Through the analysis, we maintain that the centralized, pyramids and the disunited ownership structures and the poor legal protection on the minority shareholders are the basic reasons for the controlling shareholders taking advantage of the corporate control transaction to make great amount of private benefits.On this basis, we discuss the two ways of corporate control transaction that are agreement transfer and gratuitous transfer, under the separate theoretical models, including equilibrium transaction price model, control transfer premium model, CAR model, fluctuating model of shared benefits and influencing factors model of private benefits, which set foundation for the empirical research in chapter IV, V, VI, VII.From the result of the empirical research, controlling shareholders do take advantage of the control transfer to obtain their personal benefits, which consist of the premium of the control transfer, the benefits of manipulating circulation stock price, and their annul management benefits. As for the agreement transfer and the gratuitous transfer, the latter dose harm to the further development of the target corporate. This mandatory way can only harm the benefits of the minority shareholders.Furthermore, on the basis of the analysis of the direct control transfer, we analyze the entrenchment effect on the corporate value caused by the ultimate control transfer from the dynamic perspective. The research proves that the ultimate control transfer can yield remarkable effect on the improvement of the target corporate's short-term benefits but negative effective on its medium or long-term benefits. After the ultimate control transfer, if the un-controlling shareholders cannot be evenly matched the ultimate controller after they unite, there will be a great possibility that the ultimate controller could squeeze corporate's long-term benefits, which is the so-called the entrenchment effect surpassing the supportive effect. Consequently, there is still a long way for the control market in our country to give full scope to reduce the private benefits of the controlling shareholders and to increase the sharing benefits. Additionally, we need the guarantee of the property right reforming, law, regulation, media supervision and the product market competition to protect the minority shareholder's benefits.The creative points of this article:(1) Theoretically, we discuss the two ways of corporate control transaction that are agreement transfer and gratuitous transfer, under the separate theoretical models, including equilibrium transaction price model, control transfer premium model, CAR model, fluctuating model of shared benefits and influencing factors model of private benefits.(2) From the result of the empirical research, controlling shareholders do take advantage of the control transfer to obtain their personal benefits of more than 30%. The Market for Corporate Control don't play outer-governence role in China.(3) Avoiding the static methods in researching the ultimate control, dynamically, we further carry the entrenchment effect on the corporate's value caused by the ultimate control transfer.