Research On The Influence Of Ownership Structure On R&D Investment Of Enterprises Without Ultimate Controlling Owner

Previous literature shows that there are two hypotheses about the role of controlling shareholders in corporate governance:one is "supervision hypothesis",which holds that controlling shareholders can supervise the management and alleviate the first type of agency problem;the other is "encroachment hypothesis",which holds that controlling shareholders have the right and motivation to seize their own interests by tunneling listed companies to encroach on the interests of small and medium shareholders,that is the second type of agency problem.The ownership structure of listed companies in China has begun to develop towards decentralization in recent years,and some companies without ultimate controlling owner have emerged.At the end of 2019,the number of listed companies without ultimate controlling owner in China has increased to 244,accounting for 6.43%of all A-share listed companies.In the absence of ultimate controlling owner,the rights of major shareholders are weakened,which may weaken the possibility of the second type of agency problem.However,will the increase of management rights aggravate the occurrence of the first type of agency problems?This will become the focus of this paper.On the basis of combing the existing literature,this paper studies the innovation investment of companies without ultimate controlling owner based on the data of A-share listed companies.The research shows that the R&D investment of listed companies without ultimate controlling owner is higher than that of listed companies with ultimate controlling owner,but the R&D investment of listed companies without ultimate controlling owner has a significant trend of decreasing.In order to reveal the internal mechanism of this problem,this paper chooses Nations Technologies Inc.for further analysis based on the Principal-agent Theory.At the end of 2013,Nations Technologies Inc.became a company without ultimate controlling owner with the withdrawal of controlling shareholders.Since then,the R&D input level,R&D efficiency and R&D output of this company have decreased.This study found that there are three reasons for the occurrence of this scene.Firstly,since the exit of the ultimate controlling owner,the company's executive compensation has lost the relevance with the net profit and its stickiness is low,which leads to more incentive for management to carry out high-risk projects that is conducive to short-term performance growth.Secondly,after the withdrawal of the ultimate controlling owner,the shareholding ratio is low and the dividend is decreasing year by year,which leads to the decrease of the supervision power of the major shareholders.Finally,the company goes from real to virtual because of the invalid equity incentive plan.Its investment direction began to melt,and the risk and performance assessment of investment projects are not in place.A series of evidences show that the first type of agency problem of Nations Technologies Inc.is more serious when there is no ultimate controlling owner.Through the above analysis,this paper holds that the listed companies without ultimate controlling owner will lead to more serious the first type of agency problems because of the lack of supervision by the controlling shareholders,which also disproves the"supervision hypothesis".The possible contribution of this paper lies in:theoretically,Chinese capital market is becoming more and more mature.With the withdrawal of the founding shareholders,there will be more and more listed companies without ultimate controlling owner.Accordingly,we must pay attention to whether the agency problem of this kind of companies will present new characteristics.The empirical evidence provided in this paper shows that most listed companies without ultimate controlling owner begin to have worse the first type of agency problems.The results also show that controlling shareholders can alleviate the agency problem.In reality,with the development of Chinese capital market,more and more listed companies without ultimate controlling owner will appear.The empirical evidence of this paper also provides ideas on how to alleviate the first type of agency problem of listed companies without ultimate controlling owner.The formation of effective power balance will be the key issue of corporate governance of such listed companies.