Ultimate Ownership Structure,Internal Corporate Governance And Firm Value

Corporate governance is a necessary condition for the operation, management and sustainable development of modern corporate, which has direct impact on firm value. In recent years, with the advance of worldwide privatization process and the speeding up capital market liberalization and integration, people are leaded to pay great attention to corporate ownership objectively. Since La Porta(1999) proposed the concept of ultimate ownership structure, studies on the relationship between ultimate cash flow rights, ultimate control rights, the separation of these two rights, the ultimate controller characteristic and firm value have been emerging in an endless stream. Based on that, further research on the relationships is meaningful. In addition, the research of the relationship between internal corporate governance structure and firm value can effectively make up the negative impact on firm value caused by immature external governance environment. Meanwhile, it also contributes to protect the interests of small shareholders and enhance the value of the company.China is a country with dual characteristics of emerging and transition economies. The reform of state-owned enterprises and the rise of private enterprise in our country at present make it real that there are a large number of state-owned public companies and lots of non state-owned listed companies, which has laid the foundation for the study of the relationship between ultimate controller’s characteristic and firm value. Besides, the differences of corporate ultimate ownership structure and corporate internal governance structure between state-owned firms and non state-owned ones make it urgent to study their relationships with firm value respectively.This paper is devoted to study the influence factors on firm value, including the influencing factors of company ownership structure influence on firm value and the influencing factors of internal governance structure on firm value. The method of tracing control chains introduced by La Porta, Lopez-de-Silance and Shleifer(1999) is used in this paper. Based on this method, using the data of ultimate ownership structure, corporate internal governance structure and corporate performance of Chinese listed companies disclosed by listed firms in2009to2011, this paper considers the ultimate ownership structures’ effects on firm value. According to the nature of ultimate controllers, the listed companies are divided into two groups:non state-owned and state-owned. Non state-owned listed companies consist of private, township and foreign capital controlled companies, while state-owned listed companies include county-level government controlled companies, city-level government controlled companies, province government controlled companies as well as central government controlled companies. Meanwhile, this paper also studies the effects of board size, management payment and CEO duality on firm value.The main contents of this paper:The first part is the introduction. Mainly introduces the research background and significance,research methods and research framework.The second part is the literature review. Mainly summary literature of the ultimate ownership structure, internal corporate governance and firm value, including two parts:research on the relationship between ultimate ownership structure and firm value; research on the relationship between internal corporate governance and firm value,based on previous research results summary, looking for the innovations,direction and goal of this paper.The third part defines the concept and theoretical basis. Mainly introduces the related concepts of ultimate ownership structure and the calculation method, and taking the typical company as an example to explain the control map.Introduce the mainstream view of the internal governance of the company and the theoretical basis of this paper.The fourth part is the research hypothesis and research design. According to the realistic background of Chinese securities market, puts forward the hypothesis of the relationship between ultimate ownership structure and firm value,the hypothesis of the relationship between internal mechanism of corporate governance and corporate value. And defining variables,selecting data,designing model, lay the foundation for the empirical regression.The fifth part is the empirical testing and results analysis.Through descriptive statistics, use multiple regression model to study the relationship between ultimate ownership structure and firm value, the relationship between internal corporate governance and firm value, and analysis regression results.The sixth part is the conclusion and policy suggestions. According to the results of the empirical research conclusion, put forward the corresponding policy recommendations and finally explains the shortcomings of this study.The findings show that:(1)Cash flow right is significantly positively correlated with firm value;(2)The separation degree of controlling right and cash flow right is significantly negatively correlated with firm value;(3)the firm value of firms that are ultimately controlled by state is poorer than those whose ultimate controllers are non-state-owned companies.;(4)Both board size and management payment have positive influence on firm value; however, CEO duality does not show significant influence on firm value. Moreover, there are some differences in regression between overall sample and sub-group sample. The overall sample contains both the state-owned listed companies and non state-owned ones, the regression results reflect the general characteristics of all listed companies. The differences of listed companies characteristics due to different ultimate controllers, such as ownership concentration, separation of two rights, board size, CEO duality, management payment, caused by development history, the company background, system arrangement are covered in the regression of overall samples. Effects of ownership structure and corporate governance structure on firm value of each subsample can be displayed when regression is based on each subsample.