Study On The Influence Between Controlling Shareholder And Capital Structure Of Listed Companies

Controlling Shareholder(CS) has a great influence on capital structure. We define the shareholders holding more than 30% of the ownership of listed companies as CS. CS damages the profits of minority shareholders, and gets private benefits of control by controlling listed companies.The paper examines the difference of capital structure choices between foreign and domestic listed companies. The financing behaviors are in accord with the Packing Order Hypothesis in foreign listed companies and deviation from it in domestic listed companies. The paper gives analysis for capital structure choice of domestic listed companies from the point of view of the agency problem of majority shareholder, and examines the relations between CS and equity financing preference.The paper examines the relations between CS and capital structure in China's listed companies. Empirical results show that firms with CS exist have lower debt-equity ratio(D/E Ratio) than firms without CS exist. Firms with state shareholder as CS have higher D/E Ratio than firms with non-state shareholder as CS. Ownership held by CS is quadratic negatively correlated to D/E Ratio. Future studies show that different CS modes do not have the identical influence on capital structure, though they are in accordance with the above rules on the whole. The D/E Ratio of Non-CS mode are obviously higher than that of Relative-CS, and the D/E Ratio of Relative-CS mode doesn't have the obvious difference compared with the Absolute-CS. As the increase of the shares of the Top1 shareholder, the degree of sensitivity between D/E Ratio to the shares of the Top1 shareholder reduces gradually.The studies in the article show that the characters and the controlling mode of CS have important influence to the capital structure. The influence proved that there exist agency problems between the CS and minority shareholders from the point of view of capital structure. There requires an optimization of capital structure from the macroscopical and microcosmic aspects. A very important way from microcosmic aspect is to improve the share structure of listed companies and state-owned shares reduction.