Pyramidal Ownership Structure And Control Struggle

China’s private enterprises have experienced the development of market economy,in order to use a small amount of investment can control more assets,generally choose relatively complex pyramid structure.Under the pyramid ownership structure,the controlling shareholders of domestic enterprises may seize the control of other high-quality listed companies for their own interests.There are many theoretical researches on the competition for internal control right of enterprises,but few of them use the advantage of pyramidal structure to seize the control right of external listed companies.It is hoped that the systematic study of the case of the Baoneng in the struggle for control will lead scholars and the public to think deeply,and in the improvement of corporate governance,equity structure optimization,the protection of the rights and interests from small and medium-sized shareholders summed up some useful conclusions and recommendations,but also to improve the relevant legal system to provide a reference.This paper first introduces the background and significance of the research,and then summarizes the related theories of psychological ownership,control right income,stakeholders,control right and cash flow right.The paper also reviews the domestic and foreign literatures on the pyramid ownership structure,its formation reasons and its influence on the control power struggle.In this paper,the Baoneng and Vanke control of the two events as a case study,first of all,the main Baoneng involved and the relevant parties involved in the fight for the necessary introduction;The second is to sort out,in chronological order,the course of events in which the Baoneng participates in the struggle for control of external enterprises,then,the paper analyzes the motivation of the Baoneng’s scramble for control from the aspects of inborn advantage,low cost,high rate of return and rich experience,and summarizes the means of the scramble through two events.It then analyzes the economic consequences,market reactions and social impacts of the Baoneng’s initiated control struggles on itself and the enterprises being contested.Through the research and analysis of this paper,we found that the pyramid ownership structure of control will lead to a chain reaction.This scramble for control disrupts capital markets and is bad for regulators.Based on the analysis of this case study,this paper draws several inspirations from the improvement of corporate governance.First of all,enterprises should have risk awareness in the financing process.Second,companies should carefully dilute the ownership structure ratio and establish effective communication channels.Finally,We should improve the election system of the board of directors.