Private Benefits Of Control, Corporate Efficiency And Financial Development

Agency problems in public corporates have been a hot issue for a long time. Earier literatures focus on the conflict between managers and shareholders. From later of 1990s,researchers pay more and more attentions to the agency relationship of the controlling shareholder and minority shareholders. Though controlling shareholders have the advantage of monitoring managers,they are provided with the incentive and capability to expropriate minority hsareholders. It is said that the exisistence of private benefits from control proves the expropriation of controlling shareholders,and the size of private benefits is the measurement of investor protection. Private benefits of control is a new sight for agency problems reserch. Examing the situation of corporate governance in China,the agency problems mentioned above really exist. There are few literatures of finance in sight of private benefits of control in China,and much issues have not yet be addressed. So researching along the direction has not only academic value but also practical meanings .This dissertation contributes to study how private benefits of control affect corporate efficiency and financial development. Based on the 196 control transactions between 1997 to 2006 the writer uses the block-trade-premium method to calculate the size of private benefits from control of China listed corporations firstly. Then the writer builds theoretical models to discuss the effects of private benefits from control impacting on corporate efficency and financial development. The following emperical studys draw the same conclusions with the models. The result of the dissertation is that larger private benefits of control indicate better corporate efficiency and financial development significantly.The major contributions the dissertation,as well as its innovations, are manifested in the following aspects. Firstly, the dissertation extends the study fields. The existing rsearches don't address the relations between private benefits of control and corporate efficiency in China. And no paper focuses on how private benefits of control affect financial development witnin one country. This paper attempts to research in these fields.Secondly,the paper experiments on new research. The writer relate the micro factor, private benefits of control,with the macro one,financial development. In the dissertation he provides theoretical and emperical research to build the micro base for financial development.