The Effect Of Private Listed Company's Control Right, Cash-flow Right And Their Deviation On Company Value

Based on the traditional corporate governance theory, the exist of big shareholders can effectively reduce the managers'self-interest behaviors to some extent, remit the agency problem caused by the deviation of control right and cash-flow right and improve the company value. However, since 1980s, a number of studies have found that dominant shareholders are widespread in modern corporation. The controlling shareholders often use pyramidal structure, cross-ownership, dual-class equity, etc to construct a complex control chain so that they can grab private benefit of control taking advantage of deviation of control right from cash-flow right.This paper takes the private listed company as research object. Identifies and mergers control right and cash-flow right of controlling shareholders and persons acting in concert through tracing the control chain. Analysis the effect of control right, cash-flow right and their deviation to company value, at the same time, taking free cash flow and non-tradable share reform into account.Firstly, this paper reviews previous research papers and clears the study concept. Then, starting from private benefit of control makes a theoretical analysis on the benefit expropriation of controlling shareholders to medium and small shareholders. In Empirical part, we select 856 samples between 2006 and 2009 from 224 private listed companies which list in Shanghai and Shenzhen stock exchange. Through descriptive statistics and regression analysis, we find that:In china,96% controlling shareholders'control right in private listed companies are over 10%. The "Benefit synergy" effect of controlling shareholder is not significant. The "Benefit violations" effect is significant; There is a negative relation between controlling shareholders'cash-flow right and company value; There is a negative relation between the deviation degree of control right from cash-flow right and company value. The effect is not significant; In those companies which has low free cash flow, the negative relation between the deviation degree and company value becomes more significant; Non-tradable share reform is beneficial to weaken the monopoly control. After the non-tradable share reform, the deviation degree of control right from cash-flow right declines.The expected contribution of this paper is to analyze the action mechanism of the effect of control right, cash-flow right and their deviation to company value and test it with empirical method.