Empirical Study On Relationship Between Corporate Value And Separation Of Ultimate Controlling Shareholder's Cash Flow Right And Control Right

The relationship between the ultimate controlling shareholder and minority shareholder, the ultimate controlling shareholder and corporate value is a current hot topic of the corporate governance. a large number of studies have found that the ultimate controlling shareholders obtain the control right by means of pyramidal shareholding structure and cross holding generally, which always lead to the separation of the cash right and the control right of the ultimate controlling shareholders. so, what is the relationship between the separation of the cash right and the control right and the corporate value, if the different kinds of the ultimate controlling shareholders make an significant impact on the relationship above. these issues become the subject of this paper.This paper comment on the literature compressive on the basis of reviewing the literature, then analyze theoretically the relationship between the separation of the two rights and the corporate value, propose the hypothesis, on the next, this paper select the companies from 2003 to 2010 from Shanghai and Shenzhen stock market as the samples. make demonstration models to analyze the relationship between the separation of the rights and the corporate value. this paper concluded as follows:1. The cash right of the controlling shareholder has the positive correlation with the corporate value. the cash right of the ultimate controlling shareholder represent the ownership of the listed corporate. the enhance of the cash right increase the share income, which increase the motive power of the ultimate controlling shareholder to supervise the managers of the corporate. the result of those will reduce the inter-agency cost between the owners and the managers. the increase of the cash right can play a inhibition on the behaviors tunneling the listed companies and acquiring the self-interest. those could enhance the effect of the common interest to the listed company to some extent which could increase the corporate value.2. The relationship between the ultimate controlling shareholder and the corporate value present the inverted U shaped. the ultimate controlling shareholder has both positive and negative on the listed company. the convergence effect is greater than the disaccord effect when the degree of the separation of the two rights is low. the corporate value is increasing when the degree of the separation of the two rights is increasing, the disaccord effect is greater than the convergence effect when the degree of the separation of the two rights. under these circumstances, the private benefit is greater than the joint benefit of the ultimate controlling shareholders and the corporate value decrease as the degree of the separation of the two rights is becoming larger and larger.3. When the ultimate controlling shareholder of the listed company is state-owned agency, the degree of the separation of the cash right and the control right has more positive effect on the corporate value. Because of the local administration, the ultimate controlling shareholder who is also state-owned agency invest projects considering more administrative tasks than the projects'profit. even when the role of the owner and the role of local administration is conflicting, the ultimate controlling shareholder which is state-owned agency tend to the administrative goals. in addition. there are many administrative difficulties when supervising these ultimate controlling shareholders. therefore, the degree of the separation of the control right and the cash right has the negative impact on the corporate value when the ultimate controlling shareholder of the listed company is state-owned agency.