Research On Correlation Between Control Rights And Enterprises Value Based On Life-cycle Theory

In recent years, with the development of private companies and capital market, private listed companies have been paid more attention. Throughout the course of development of private listed companies in China, there are some good results both on quantity and quality; and compared with those developed countries in Europe and America, the overall development of the capacity is still relatively weak, especially on controlling shareholders’agency problem. In addition to the late development of private companies, the imperfections of China’s capital market and the distemperedness of financial system are also important reasons. Controlling shareholders use pyramid structures extensively to keep rights of control, and it is one of the important characteristics of China’s private listed companies. In this process, it is very easy for controlling shareholders to take advantages to encroach the whole companies’ interest, further more it can decrease companies’value and finally influence the development of national economy. Study on the relationship between controlling rights and enterprises’ value of private companies seems very necessary and important. Based on this understanding, combined with the life-cycle theory、 agency theory and theory of corporate value, from the point of the characteristics of private companies and the tendentious economic behavior that the controlling shareholders choose during different life cycle stages, this paper have discussed different levels of the decreasing enterprises value during different stages coursed by the controlling structures. And this paper have empirically tested private listed companies on growth stage、mature stage and decline stage from the relevance of controlling rights、cash-flow rights、the separating degree of them and controlling level and the enterprises value. The conclusions are:during all the different stages (the above mentioned) of life-cycle, controlling rights and controlling level are both negative correlated to the enterprises value, and the negative correlation is gradually increased; during the growth stage and mature stage, the cash-flow rights is negative correlated to the enterprises value, and the negative correlation is gradually increased; during the decline stage, the cash-flow rights is negative correlated to the enterprises value, but insignificant. Contrast to cash-flow rights, the separating degree of controlling rights and cash-flow rights has a negative correlation with enterprises value during the growth stage and the mature stage, but has a positive correlation with enterprise value during the decline stage and this conclusion is not agree with hypothesis4and hypothesis6. And this paper has also analyzed the possible cause of this problem. At last, this paper investigates the solution to controlling shareholders of private listed companies encroaching the interest of minority shareholders and damage of enterprises value-strengthening social supervision and improving the governance environment are approaches and building and completing the related legal system are the keys.