Ultimate Controller Characteristics,governance Environment Differences And Financial Dilemma------from Empirical Evidence Of Chinese Listed Companies

Currently, the researches conducted by scholars both home and abroad in enterprise financial dilemma are focused on the early warning model of financial dilemma of listed companies. Such researches include mainly the examination of information effectiveness and judgement success ratio based on which internal financial index of enterprises predict enterprise financial dilemma. They do not consider the effects of ownership properties and external environment upon enterprise financial dilemma, that is they ignore the analysis of ownership properties, government behavior, level of regulations and local marketization behind listed companies. Besides, since La Porta et al.(1999) first proposed ultimate controller, more and more researches on ultimate controller emerge gradually and become one of the main streams of enterprise governance studies.Based on above analysis, this paper, with listed companies in Shenzhen and shanghai stock markets during 2005 and 2008 as the samples, after integrating real controller properties, ownership properties listed companies have, and the background of real controller according to CSMAR database, and judging the types of ultimate controller of listed companies, this paper categorizes them into four classifications(central government control, provincial government control, municipal government control and non-governmental control), and tests the effects of ultimate controller features and governance environment upon enterprise financial dilemma.Research results show that: ultimate controller features of listed companies significantly affect enterprise financial dilemma; that is, higher level government controlled enterprises compared to non-governmental enterprises are less vulnerable to financial dilemma; compared to non-governmental enterprises, lower level government controlled enterprises are more prone to financial dilemma; compared to lower level government controlled enterprises, higher level government controlled enterprises are less affected by financial dilemma; governance environment where listed companies exist are significantly related with enterprise financial dilemma. To be more detailed, the less the government interference, the higher the level of regulations and the faster the marketization, the less the possibility of listed companies getting involved in financial dilemma. This paper enhances the existing theories on enterprise governance and provides direct empirical evidence for the analysis of the root of enterprise financial risks.