Research On Excessive Private Benefits Of Control

In the concentrated ownership structure, conflict between large shareholders and minority shareholders becomes one of the major concerns of corporate governance research. While solve this problem, many studies spread out on the point that private benefits of control(PBC) completely comes from expropriation of large shareholders to minority shareholders. In these studies, the relationship of both sides is completely antagonistic conflicted, the existence of the PBC will eventually "hollowed out" company. However, according to the above research perspectives, it is hard to explain the phenomena that most companies have not been "hollowed out" to decline with long-term existence of PBC.The latest theory of PBC defined a new concept, that is excessive private benefits of control (EPBC), and point out it is reasonable and necessary for large shareholders to gain reasonable benefits from control rights. Under this conceptual framework, the new theory gives adequate and reasonable explanation to the phenomena stated above. This paper researches in depth into the basic arguments of the new theory both theoretically and empirically to further validate and enrich relevant research. It is useful for understanding of the relationship between PBC and the value of the company, which will promote the improvement of corporate governance in China, maintain the healthy operation of the stock market.On the basis of research results at home and abroad, this paper measures the overall level of PBC; and then establishes the measurement model of reasonable private benefits of control(RPBC) for the purpose of dividing PBC into two parts:RPBC and EPBC. After that, this paper analyses of the influencing factors of the two parts respectively. At last taking grouping contrast, this paper studies the relationships between the company value and both kinds of PBC.The conclusions come as follows:Firstly, PBC does not completely come from expropriation of large shareholders to minority shareholders, because part of it is compensation to the cost of control right. Only the excessive part should be defined as the rob of the minority shareholders’wealth. Then, RPBC would promote the improvement of corporate value while EPBC deduces it.