Theoretical Study Of The Corporate Control Premium

In recent years, with the continuous development of capital market, China’sequity market is also gradually perfect, and in the process of company equity trading,the transfer of control power is a common phenomenon. According to general theory,the company’s shareholders should obtain the corresponding earnings in proportion totheir shares;however, in fact it is not the case. Controlling shareholders have thepower to make decision in selecting the board of directors and appointingmanagement, determining amount of bonus, deciding to invest the direction and thecorresponding source of funds, managing disposable cash flow and dividingallowance, the free choice of the decisionof settlement and sale, and they can obtainthe extra revenue which is out of proportion with their shares, and it is value whichthe management option of the controlling shareholders bring. Therefore, we shouldstudy on the control premium comprehensively and systematicallyand we also needclarify its mechanism and different influence factors, and thenwe could take effectivemeasures to supervise.First of all, based on the fully research on related literature at home and abroad,in-depth understanding the relevant theory,paper study the formation mechanism ofcorporate control premium. Secondly, it analyzes the affecting factorsof controlpremium and its value,such as the proportion of control power, physical control andrelative control, the constraints of internal governance structure, and externalsupervision and so on. Finally, it analysis the options value of corporate control byoptions related theory and method and builds the evaluation model of corporatecontrol value based on the management control option, and by applying this theorymodel, this paperputs forward the measure model of control premium based on theChinese market.The innovation of this paper lies in that the domestic scholars regard controlpremium asthe result that controlling shareholders use their control to obtain selfinterestgenerally, for this, this paper does not agree. This text thinks that control premium is largely derived from the control of the value of management options, andbased on the theory model of management option, after fully considering the influencefactors of corporate control premium, constructing the evaluation model of corporatecontrol premium.