Private Benefits Of Control And Ownership Structure--An Empirical Research On Concentration And Expropriation

In most countries in the world, a phenomenon that controlling shareholders expropriate corporate assets is very popular. In fact, the expropriation is more popular in China. Many people think it should be associated with ownership structure. Building on the empirical research of private benefits of control and ownership structure, this paper analyzes the expropriation of controlling shareholders in listed Chinese companies. This paper estimates the private benefits of control of listed companies based on 91 samples of control transactions between 2001 and 2002,and investigates the effects of ownership structure on private benefits of control. Then give a theoretic analysis about protecting of investors and private benefits of control.This paper find out following results: (1) the average of private benefits of control in China is more than that around the world;(2) Private benefits of control has negative correlation with the shares of the controlling shareholders and has no significant correlation with the state-owned shares;(3) Poor legal rules protecting public investors is associated with higher private benefits of control.This paper suggests that the real reason for the expropriation is poor protecting for investor rather than ownership concentration. Ownership concentration does not necessarily lead to less expropriation. In the case of good legal environments, the controlling shareholders could have an efficient effect on corporate governance.