The Research On The Controlling Shareholder's Agency Problem Of Public Family Business In China

In recent years, with the development of China's private economy, China's listed family businesses also has an unprecedented development. More and more family business through public financing has been well developed, forming a large number of considerable size and strength enterprise groups. From the analysis of these listed family business ownership structure, we could found that these market shares are relatively concentrated with the family holding characteristics. As the controlling shareholder of these families have enough power to influence public company, it has the capacity to affect business decision-making to their own private interests, which makes the business decisions away from maximizing business objectives, resulting in a serious agency problem.In conclusion of previous research, this paper starts from the controlling shareholder agency problem theory aspects. Evolved from the theory, we get generation mechanism of this kind of agency problems. The existence of private benefits of control is the generated power, the separation of cash flow and control is the prerequisite.And we build up a theory game of the controlling shareholders and minority shareholders agency problems to analyze the controlling shareholders act of usurpation, and the controlling shareholders to implement a mechanism to seize the benefits. Then, Give out an analysis of the listed family businesses controlling shareholder agency problems .Listed family business primarily through the pyramid structure to get the control and cash flow rights separation. The agency costs are mainly business investment inefficiency, firm size inefficiency and control of transfer's non-efficiency. Finally, though about 347 family listed companies' empirical study,we get the following conclusions:First, The larger the controlling shareholder's cash flow rights, the smaller the family business agent cost. Second, The bigger of the extent of the cash flow rights's separation ,and its impact on agency costs is not significant. The reasons is that the shareholder in order not to conceal its controlling benefit expropriation behavior, will not make obvious on-the-job consumption, they will be likely gaining more private income by assets occupy the benefit expropriation to concealment. Third, other non-family shareholder's supervision could limit the capacity of opportunistic behavior, so as to induce the cost of the agency problem. Forth, With the increase of the family business's asset-liability ratio, the agency costs of family enterprises increases, it means the creditor couldn't play a supervisory role on the controlling shareholder.Finally, this paper puts forward suggestions from the following aspects: strengthening the protection of small shareholders to vote, improving corporate governance and strengthening of external control measures.