Pyramid Shareholding Structure And Capital Structure Decisions Of Family Firms

With the rapid development of private economy in China, more and more listed family firms begin to come forth. After serious study on the ultimate ownership structure of China's listed family firms, we learned that pyramid shareholding structure is universal existence in listed family firms. Many ultimate controllers control a number of listed family firms by constructing pyramid structure, as a result, lots of family systems are formed in china security market. To be accompanied by the outbreak of crises of some family systems on and on, more and more experts begin to pay close attention to the research on pyramid structure.First of all, the article reviews the literature at home and abroad, summing up theories related to pyramid shareholding structure and capital structure, then hypotheses are put forward on the base of theories. Finally empirical study has been finished by choosing listed family firms as a sample. There are four chapters in this paper. The first chapter is about research background, the significant of the topic, research review, main content as well as the frame of the paper. The second chapter is about the present theory of pyramid shareholding structure and capital structure. By putting forward hypotheses and controlling relevant factors, multiple regression models are established in the third chapter. The fourth chapter focuses on the empirical study and outcome analysis. The last chapter is the conclusion.Results show that firstly, pyramid shareholding structure is the main way used to strengthen control of listed family firms. Secondly compared to the non-separate pyramid structure, separation pyramid structure build by ultimate controllers leads to the result that listed companies prefer higher debt levels. Thirdly, compared to single-chain, multi-chain pyramid structure build by ultimate controllers makes the listed companies financing more funds from group internal. Fourthly, vacuum control rights have negative correlation with debt levels, the listed firms which don't have vacuum control rights hold higher debt levels than firms which have vacuum control rights. Fifthly, separation degree between control rights and cash-flow rights is negatively related to debt levels. Sixth, More complicated pyramid structure, listed companies are more likely to finance funds from group internal.