| In 1999,La Porta 's study found that,there were ultimate controllers in listed companies of most countries in the world.The ultimate controllers got control rights of listed companies by pyramids-shareholdings or cross-shareholdings.The characteristic was a deviation between the cash flow right and the control right.Ultimate controlling shareholder took use of "separation of control right and cash flow right" to control the company,and expropriating interests of minority shareholders.The study also noted,in the East Asian countries,because of the relationship between listed companies and government and law is not perfect, the phenomenon of ultimate control was more serious.By reading relevant literatures, we have reviewed theories of ultimate control and capital structure. On this basis,we have done the research on the status of the ultimate controlling shareholder of listed companies in China (Shenzhen Stock Exchange).And we have explored the relationship between the ultimate controlling and capital structure choice.Drawing some useful conclusions.The source of agency problems of ultimate control is the incompleteness of the contract.Its performance is that complex control chains cause separation of cash flow right and control, and then the ultimate controlling shareholders occupy the interests of minority shareholders.Separation of Cash flow right and control right is the essencial characteristic of agency problems of ultimate control. Separation between cash flow right and control right in listed companies controlled by non-state ultimate controller is more common and much higher. The capital structure decision motivation of ultimate controllers is the equity non-dilution effect. Complexity of ultimate control chain which is a new ultimate control capacity variable can magnify the equity non- dilution effect.The nature of the ultimate controlling shareholders has no effect on the capital structure decision-making. |
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