| Share structure is one of field with the most extensive research activities due to its role and efficiency in company governance. Many scholars are engaged in this area and a lot of conclusions have been drawn, whose study viewpoints are generally classified into two types, one is based on company performance or company value, the other is based on company decision behavior represented by investment and financing. Although lots of studies have been carried out in the first type, fully-agreed conclusions have not been achieved due to selection of performance index, endogenous relationships between share structure and company value, and classification of share structure types. However, share structure does not change company value directly, the reason is company value comprises present assets value generated from past investments and present value of cash flow generated by future investments, therefore investment decision is regarded as ligament between share structure and company value and influences of share structure upon company investment & financing activities has become a hot research topic. In addition, many Chinese listed companies encountered common problems, like un-rationally investment, idled funds, funds impropriated by control shareholders, funds usage changed without approval, therefore under such real conditions, study of how share structure influences company investment behaviors is quite meaningful and significance.Current share structure study mainly focuses on share nature and portion, and control shareholders are defined as the biggest shareholder (or sum up share portions of those shareholders within top 10 disclosed by annual report and who have controlling affiliated relationships and the biggest one is considered as control shareholder). Therefore the highest control shareholder is not found and discovering root reasons is very difficult to study only the lowest level big shareholders under such a pyramidal share structure. With developing of capital market, pyramid structure in share holding came into being in listed companies, and it is very difficult to get the root reason if only study the first level big shareholders under such share holding structure. New abruption of two rights occurred due to pyramid share holding structure, which means ultimate shareholders' control right exceeds cash right over listed companies, but ultimate shareholders share in decision fruits just according to portion of cash right, even though they own control right. Ultimate shareholders' pursuing private interests makes goals of companies' investment decisions to be fortune maximum for big shareholders, instead of company value maximum (including equity value and security value), therefore interests conflictions amongst shareholders is further strengthened. Indeed ultimate shareholders have not only trend of hollowing listed companies, but also effect of sustaining listed companies. Sufficient cash rights hold by ultimate shareholders make them motivated to restrain listed companies' non-efficient investments.Since 2004, Chinese listed companies began to disclose actual control shareholder information and present property right and control relationship between companies and actual control persons using pane charts which provide a foundation and make this article's study possible. In order to clearly understand the characteristics and control right and cash right owned by ultimate control persons, and get to know influences on companies' over-investment and under-investment for purpose of improve companies' non-efficient investment from ultimate property right point of view, this article studies how interests harmonization and confliction between shareholders influence companies' non-efficient investment behavior from ultimate property right point of view. Therefore studies conducted by this article is quite meaningful and significance in theory and reality.This article firstly based on hackling previous literatures theoretically demonstrates supporting and hollowing effects to listed companies by ultimate control shareholders, then construct income model for ultimate control shareholder, and observe company investment decision behavior under precondition of maximized ultimate shareholders interests. Secondly, this paper discourses upon in detail the regulation background and current status of ultimate property right and investment of Chinese listed companies in manufacturing industry. Finally, this paper conducted a demonstrational study using 1366 non-proportional samples from 2003 to 2007 from Chinese listed manufacturing companies as study objectives, with regression analysis by Tobin Q Model as basis, taking regression residual value as companies' non-efficient investment variable, and separately studies ultimate shareholders' influences upon over-investment and under-investment with robustness examination by Euler Equation as the most suitable model. Blew conclusions are drawn by the author:(1)Theoretical model indicates that over-investment of listed companies will be restrained or their over-investment tendency will be transferred to under-investment (or deteriorate the under-investment), given that fund are impropriated directly by ultimate shareholder. If ultimate shareholders procure indirect interests through affiliated businesses, then over-investment will happen to listed companies, and the more interests brought by control right, the worse the listed companies' over-investment.(2) Even though listed companies were not hollowed out by ultimate share holders, over-investment still exists in listed companies because ultimate shareholders accept different net present value of investment project from middle and small shareholders, given that non-tradable shares exist. Moreover, the larger scale the non-tradable shares and equity financing, the worse the listed companies' over-investments.(3) There are no apparently differences in over-investments between private enterprises and state-owned companies, but under-investments in private enterprises is more severe than in state-owned companies, because private enterprises are much more impacted by insufficient fund and macro factors etc.. While for state-owned companies, the degree is higher that administrative level of ultimate shareholders influences both under-investments and over-investments of listed companies.(4) The demonstrational results, impact upon companies' non-efficient investments by ultimate shareholders, indicate that cash rights of ultimate shareholders correlate negatively with companies' over-investments, and converse U relationship exists between control rights and companies' over-investments. It tells us that the higher the two rights' abruption degree, the worse the over-investments, no matter the abruption degree is measured by the ratio or difference of two rights and companies' over-investments can be effectively restrained by investors' law protection level and market competitiveness the companies confront. The influences towards companies' under-investments by above mentioned factors did not pass significance testing, but companies' under-investments are much more influenced by ultimate shareholders' impropriation of listed companies' fund.(5) It does not pass the significance testing that to what extent the pyramid layer amount influences a company's non-efficient investments with a pyramid share holding structure. However, it is indicated that the degree of over-investment in companies with more pyramid layers than in companies with less pyramid layers, which is regressed using state-owned companies as samples. This means that when government agencies act as ultimate shareholders, the more layers the pyramid has, the less the administrative intervention intensity to listed companies, and the lower the over-investment degree.Three innovations are presented in this article:Firstly, companies' over-investments and under-investments are studied from view of ultimate property rights. Based on domestic and overseas studies of how share holding structure influences companies' investments scales and ultimate property rights influence companies' performance, taking currently widely used pyramid model share holding structure into consideration, companies' non-efficient investments behaviors are studies directly from view of ultimate property right, in order to observe supporting and hollowing behaviors by ultimate shareholders to companies.Secondly, theoretical model of ultimate shareholders influencing companies' investments behaviors is set up. Using west countries' research literatures and taking special regulation background, theoretical model of ultimate shareholders' influences on companies' investments behavior is set up from view of two assumptions that ultimate shareholders directly impropriate listed companies' fund and get private interests indirectly.It is found through the study that ultimate shareholders' behavior of impropriating listed companies' fund can lighten intensity of over-investment behavior or strengthen under-investment behavior, and it is also probable that this impropriating might transform companies' over-investment trend to under-investment. Assuming that ultimate shareholders indirectly get private interests from companies' investments, this article ultimate shareholder interests model from two aspects, private interests from control right exist (further divide into separate-share-holding and fully circulating cases) and does exist. Study results indicate that when ultimate shareholders get private interests indirectly from companies, over-investment behavior will happen to listed companies, and the bigger the interests from control right, the severe the listed companies' over-investment behavior; Sufficient fund hold by ultimate shareholders can help restrain companies' over-investments shown as sustaining effect. Given that other conditions do not change, over-investment with shares fully circulating is less intensive than with shares partly hold as non-tradable; Over-investments can also be restrained by to what extent the investors are protected and influences on shares prices by middle and small shareholders.Thirdly, two different investment models are adopted to calculate companies' non-efficient investment level. This article studies how non-efficient investments are influenced by each variable of ultimate shareholders based on companies non-efficient investment level calculated by the most optimized investment models, therefore the level of non-efficient investment imposes a directly impact on this article's study conclusion. To compensate the shortage of Tobin Q Model, Euler Equation is used to conduct robustness examination. That is two different investment models are adapted to calculate companies' non-efficient investment level. Demonstrational results indicate that influences by ultimate shareholders on "non-efficient investments calculated by two different models" are basically consistent, which ensures the reliability of this article's demonstrational conclusions.
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