Ultimate Controlling Shareholder,Equity Balance And Debt Structure

The ultimate controller controlled the corporation by dual-class equity, Pyramids-shareholdings or cross-shareholdings and leaded to a deviation between the control right and the cash flow right. This deviation make the ultimate controller can achieve the goal of controlling the company actually with smaller share and facilitate expropriation. The research on the companies’strategies showed that the debt financing can mitigate the conflict between the inner controlling shareholder and the outer investors to some extent. The paper adopted the sample of the listed companies in Shenzhen and Shanghai between2010-2013to research the relationship between the degree of the deviation and the debt structure.This paper studies the following specific problems:(1) the relationship between the degree of the deviation and the debt structure;(2) the relationship between the property of the ultimate controller and the debt structure and how the property impact the relationship above;(3) the relationship between the check-and-balance ownership structure and the debt structure and how the property impact the relationship above;The existing research considered the capital structure as the object to find the financing proportion that maximize the shareholder wealth and regard debt as homogeneity. The study of debt structure is more focused on the impact of company’s financial characteristics on the debt structure but less pay attention to the relationship from the view of ultimate controller.The result is expected as follow:(1) the degree of separation of ultimate controlling shareholders’control right and ownership is significantly negative correlation with debt maturity;(2) the property of the ultimate controller is significantly positive correlation with debt maturity and may intensify the relationship in (1);(3) the check-and-balance ownership structure is significantly positive correlation with debt maturity and may mitigate the relationship in (1).The paper enrich the theory of financing to guide enterprises to make the right financing decision and provide the basis for medium and small investors; It also provide a way to protect the small and medium-sized investors through check-and-balance ownership structure; It provide the theory and empirical evidence for the formulation of government policy.