Study On Reasonable Private Benefits Of Control, Excessive Private Benefits Of Control And Investment Of Corporation

Private benefits of control have always been one of the most important research topics in the area of corporate finance. It had got brilliant achievements. Obtaining the private benefits of control is the main motivation for large shareholder to control the company. Driven by such motivation, the strategies and action made by large shareholders would not base upon the goal of company value or the stakeholders'anymore. As the gradually deepened research of corporate governance and the breakthrough of shareholder homogeneity hypotheses in classic economics, , the benefits conflict between controlling shareholders and minority shareholders have increasingly become the major problem in the corporate governance research since the early 1990's. .The motivation of pursuing private benefits of control by controlling shareholders, the development, and the impact that is distributed among the corporate financial policies, with the shift of central problem of corporate governance, has been paid more attention.From the perspective of degree of measurement of private benefits of control and its impact, characterizing the problem of entrenchment has always been the important evidence for the research stated above. Nevertheless, the issue of controlling shareholders and their private benefits of control emerged, and this phenomenon can not be given a reasonable explanation by following the current research perspectives. Thus, it is necessary to conduct further research on private benefits of control in more detail.If we could gain better knowledge on these phenomena and give the reasonable explanation, then it would be helpful to understand the behavior of private benefits of control pursued by large shareholder, the behavior of adopting strategies on inefficient finance that is resulted from pursuing controlling private benefits, and the impacts of these behaviors on the value of corporate. Consequently, the issue of corporate governance would be better understood and improved more effectively.This study centered on the issue of the property of private benefits and its influences on the investment behavior of listed company. The purpose of this study was to explore the double properties of private benefits of control, and the pursuing, the formation, and distribution of private benefits of control, as well as its influence on cooperate investment. Furthermore, this study was to seek the explanation on the paradoxes of private benefits of control.Firstly, the paper reviewed the current and past researcher in the fields systematically and constructed model to analyze the private benefits of control behavior, and fined different private benefits of control. Secondly, we studied the influence of private benefits of control on coporate value and coporate decisions with empirical and real options method. The main contents of the thesis are three parts: Part one, empirical research the existence of reasonable and excessive private benefits of control, and the influence on corporate value based on data from Chinese market and present the views that reasonable private benefits of control have positive effect on firm value and exceesive private benefits of control have negative effect on firm value. Part two, study the relationship between inefficient investment behavior and two kinds of private benefits of control and presented the results that excessive private benefits of contol simulated inefficient investment and reasonable privat benefits of control won't. Part three; we study the the interrelationship between private benefits of control and corporate inefficient investment timing based on some hypothesis using real options method, and discussed the prompting effect of private benefits and the alleviating effect of growth options on inefficient investment.The creativities of this study are described as bellow:First, I found that the decrease of cooperate value are not always resulted from the pursuit of private benefits of control by large shareholder.. If large shareholders solely pursued reasonable private benefits of control, the company value would be increased appropriately. On the other hand if excessive private benefits of control were pursued by large shareholder, the company value would decrease, and the minority shareholders and stakeholders would suffer from the damage. So, we must distribute the private benefits of control into distinct catalogs, and treat them respectively. The existing private benefits of control may play an active role in company. This conclusion provides a new perspective for the future research.Secondly, with the situation of Chinese"Economies in Transformation", I provided empirical evidences for the fact that reasonable and excessive private benefits of control in Chinese market, together with both the positive effect of reasonable private benefits of control and negative effect of excessive private benefits of control on company value, exist.. These data provided evidence in order to gain better understanding of the construction and supervision of Chinese capital market, as well as the hot debate about stock right that was decentralized allot revolution.The last point is that we further researched large shareholder's decision of investment based on reasonable private benefits of control ideas, and go beyond the research on the alleviate effect of growth options on large shareholder's underinvestment. This provided more significant perspective for further research about the factors that have influence the inefficient investment of large shareholder.