Institutional Environment，Divergence Between Control Rights And Cash-flow Rights,and Corporate Over-investment Behavior

With the study emphasis of corporate governance transferring from the agentproblem between shareholders and managers to the agent problem between controllingshareholders and minority shareholders, expropriation of controlling shareholders hasalready been the study focus of corporate governance. This dissertation traces theultimate controllers of listed companies, investigates the expropriation of controllingshareholders from the perspective of investment and studies the impacts of divergencebetween control rights and cash-flow rights on corporate over-investment behavior.Furthermore, the dissertation explores that whether the relationship between divergenceand over-investment will be significantly different when companies are in differentinstitutional environment and earnings state.Firstly, the dissertation briefly introduces related theoretical bases, reviewsliteratures on ownership concentration and expropriation of controlling shareholders andliteratures related to divergence between control rights and cash-flow rights both foreignand domestic, and analyzes the impacts of divergence between control rights andcash-flow rights on corporate over-investment behavior in theory. Then, choosing themanufacturing listed companies during2007—2010as sample, the dissertationempirically studies the impacts of divergence between control rights and cash-flowrights on corporate over-investment. The main works are as follows:(1) estimatingcompanies’ predicted investment expenditure through Richardson(2006) model, andusing the difference between actual added investment expenditure and predictedinvestment expenditure to measure the level of over-investment;(2) choosingcompanies those are in over-investment as the research object, and empirically studyingthe impacts of divergence between control rights and cash-flow rights on corporateover-investment;(3) empirically studying whether the relationship between divergenceand overinvestment is different when companies are in different institutionalenvironment;(4) empirically studying whether the relationship between divergence andover-investment is different when companies are in different earnings state.The empirical study results of this dissertation show that:(1) the more thedivergence between control rights and cash-flow rights, the more over-investmentlevel;(2) with the improvement of institutional environment, the relationship betweendivergence and over-investment will be weaker;(3) for companies in good earning state, over-investment caused by divergence between control rights and cash-flow rights willbe more serious. The finds have important implications for enhancing informationdisclosure quality of listed companies, strengthening supervision of companies whosecontrol rights differ from cash-flow rights and improving construction of investorprotection laws and regulations.