Ultimate Control People, Control Layer, And Enterprise Growth

In the centralized enterprises, ultimate control person builds the pyramid control structure, which leads to the separation of residual control and residual ownership, and the separation of ownership and control of cash flow. It deviates from the principle of "one share one vote". From the point of view of enterprise type the motives of building pyramid control structure for state-owned enterprises and private enterprises are not exactly the same, and have different effects on enterprises economic consequences. The article selects the manufacturing companies that have pyramid structure in A-share from2009to2011, and researches whether the enterprise type affects the control layer and growth, and the relationship between control layer and growth for each enterprise type.The paper uses principal component analysis method to construct the enterprise growth evaluation system. Then establish linear regression model between the enterprise growth and control layer. Through the empirical study we found that in the state-owned enterprises the control layer and the enterprise growth are positively correlated. The integration of government administration with enterprise is serious before the reform of state-owned enterprises. Listed companies with ultimate control people at lower levels are more vulnerable to government intervention. Ultimate control people of state-owned enterprises usually are state-owned shares, state-owned legal person share, or national agencies, who bear the national political or economic tasks. And these tasks make the state-owned enterprises disconnect to the market in the process of corporate governance and operation, and the independent rights of the enterprise are tighten by the government; More control layer means the government down to the right of state-owned enterprises and put the enterprise in a free market competition. The ultimate control people of private companies build the pyramid control structure mainly because of avoiding the external financing constraints or obtaining the private benefits of control rights. Existing literatures show that ultimate control people of private companies do tunnel behavior and support behavior to small and medium investors. When the control layer is small the support effect is bigger than the tunnel effect, as the control layer becomes bigger the tunnel effect is obvious than the support effect, it is not conducive to the listed companies growth. So the paper assumes that the control layer of private enterprise is negatively related to the enterprise growth; while the empirical results show that the negative correlation between the two is not significant.The paper chooses enterprise scale, asset-liability ratio, fixed assets ratio, inventory turnover and operating cash ratio as the control variables. The regression result s show that the effect of inventory turnover to the growth is not significant, other control variables have significant effects to growth. These are consistent with the existing literature results. Refer to the above research conclusion, the paper puts forward several constructive suggestions to the state-owned enterprises, and provides policy suggestions for the constructions of growth system in the private companies.