An Empirical Research On The Influence Of Characteristics Of Ultimate Controller On The Firm Value

Traditional research on agency problem of controlling shareholders concentrates on the direct controlling shareholders. They study the harming of the direct controlling shareholders to the listed company. This paper selects the data of listed company of Hu-Shen stock market in 2005-2006 as sample, finds the real controller-the ultimate controller by tracing the control chain, adopts T-test and multiple linear regression, studies the relationship between the characteristics of ultimate controller and the firm value in various aspects and provides the corresponding measures according to the test result in order to provide more basis for preventing the tunneling of the ultimate controllers and protecting the minority shareholders.This paper studies four characteristics of ultimate controller-cash flow rights, control rights, the separation of two rights and the nature of the ultimate controller. First we test the effect of the cash flow rights on the firm value. The result shows that the cash flow rights are positive to the firm value. The more the cash flow rights owned by the ultimate controller, the more the firm value and vice versa. Second this paper test the effect of the control rights on the firm value. The result shows that the relationship between the control rights and the firm value is none-linear: a converse N shape. The inflexions are 26.32% and 67.60%. When the control rights below 26.32%, the control rights is negative to the firm value; when the control right between 26.32% and 67.60%, the control rights is positive to the firm value; when the control rights excess 67.60%, the control rights is negative to the firm value again. The cash flow rights and the control rights show different effect characteristics. In order to find the further reason, we go on to study the separation of two rights. The result shows that the separation of two rights is negatively related to the firm value. This explains the non-linear relationship between control rights and firm value. In order to completely research on the ultimate controller's characteristics, this paper studies the nature of the ultimate controller and the firm value. It shows that firm of state-ultimate owned company is not lower than the non-state owned company significantly. We can't say which one is more efficient between the state-ultimate controlled and non-state ultimate controlled company. The non-state ultimate controllers prefer to establish the complex pyramid structure to control the listed company. The non-state ultimate controllers are more active and more efficient. Two effects lead the difference of the firm value of the stated owned and the non-state owned ambiguous. The separation of two rights decides the motivation and ability to invading the minority shareholders.