Private Benefits Of Control And Its Factors Of Public Corporations In China

Using block premium method and modification of negotiation power and security value’s difference, the research measures private benefits of control of China’s stock market after the equity division reform. Then this paper focuses on empirical analysis of factors which influence private benefits of control in China’s stock market. Formerly, net asset, which is considered as substitution of public price after announcement, is widely used as shared value of all stockholders. However, it goes far away from the core assumption of block premium method. In fact, it’s possible for us to use public price after announcement as the measurement of shared value after the equity division reform. This study measures level of private benefits of control in China’s stock market, using a sample of negotiating trades of tradable and limited tradable shares launched by public companies which have completed the reform from year2006to2011. In addition, the paper then does an empirical analysis of factors which influence private benefits of control in China’s stock market using transaction-character factors and company-character factors. The result shows that company size、cash flow、ROE and fixed assets proportion play an important role in private benefits of control.