A Study On The Impact Of Characteristics Of Property Right And Capital Allocation On PBC Extraction

The private benefits extraction of control has been became the main issue of firm’s agency problem.Given the dominant position in firm’s control right structure,controlling shareholder participates in decision-making as to gain the private benefits that is not shared by other shareholders.Shareholder as the personified property owner,the diversification of property owner in type and position that leads to differences on shareholders’ decision-making changes control structure,which results in having an impact on firm’s investment decision lead by controlling shareholder.Therefore,property characteristics and firm’s investment behaviour based on private benefits extracted from large shareholder becomes the essential issue in corporate governance and corporate finance research field.Given that Blockholder behaviour is affected by association of property right,this dissertation establishes the theoretical association between property characteristics and capital allocation driven by private benefits extracted from large shareholder through contract theory,agency theory and the theory of corporate control.This dissertation empirically examines the relationship between shareholding diversification and private benefits expropriated by controlling shareholder,the association between the differences on capital allocation and private benefits extraction,and therefore,whether shareholding diversification has an effect on the association between the differences on capital allocation and private benefits extracted by controlling shareholder.The dissertation shows that shareholding diversification restrains private benefits expropriated by controlling shareholder and that the counterbalance effect of shareholding diversification on private benefits extracted by controlling shareholder is affected by the difference on control.Shareholding diversification under non-state control restricts the level of expropriation by controlling shareholder compared with state control.The dissertation also finds that the level of extraction is affected by the differences on capital allocation and that investment in equity is negatively related to private extracted by controlling shareholder,while intangible assets investment is positively associated with private extraction by controlling shareholder.The dissertation also indicates that private expropriation by controlling shareholder is attributed by the depth of shareholding diversification through investment in equity,tangible assets and intangible assets.Those results indicate that the improved governance structure by diversification of property owner characteristics adjusts controlling shareholder’s cognition on capital allocation that affects private benefits extraction,which provides policy suggestion to security market regulation on enhancing governance structure reform in public firms.