Control Rights, Cash Flow Rights And Corporate Performance

Ownership structure, which decides who controls a firm is play a very important role in corporate governance. Controlling shareholders can hold control rights exceed their cash flow rights in concentrated ownership structure. The deviation of the two rights would drive controlling shareholders to obtain numerous private benefits if minority shareholders are poor protected, because the costs of expropriation are so low. Without a strong reputation, no rational investor would finance such a firm. If so, neither capital markets nor firms can develop well. The paper analyses the effects of the discrepancy between controlling shareholder's control rights and cash flow rights on corporate performance.Section two of the paper reviews research abroad about corporate governance in different ownership structure, especially in concentrated ownership structure. The fact that ownership structure is concentrated prevalently makes recent research focus on the first, how investors' (both shareholders and creditors) protection by law influences capital markets and corporate governance and the second, the conflict of interest between controlling shareholders and minority shareholders. Section three studies: (1) how minority shareholders' protection influences controlling shareholders' expropriation. (2) What is the reason that controlling shareholders expropriates minority shareholders? (3) Through which ways that controlling...