An Empirical Study On The Relationship Between Family Control Right's Characters And Firm Performance In Private Control Firms

The relationship between control right and firm performance or firmvalue is a hotspot inside and outside. We thought "family control right"has special meaning in china, is more worth to study than managerialcontrol right(or insider control right), director control right, majorityshareholder's control fight and so on. It can represent the character ofChinese private enterprises' ownership structure well. This paper use 322private control listed firms as samples, mainly studied the character ofproportion distribution, road of acquired, way of achieved, internalstructure and other characters of family control right, and analyzed howthese character influence the firm performance. In our study we found there is non-linear relationship between thecharacter of family control right's proportion distribution and firmperformance (in fact is cubic form),that is"expropriation—alignment—entrenchment" which is the reverse of thatfound in earlier U.S. and U.K. studies. The reason is they are controlledunder different "team" and in different environment. The result of dataanalyst reveal that the performance of the whole Chinese private controllisted firms are not good, this is confirm to the result about Chineseprivate control listed firms' performance revealed by the report of 2005china corporate governance issued by study center of Shanghai stockexchange.In research the character of family control right acquired road, wefound the indirect way is the major form nearly 62.42% in the sample, thedifference of firm performance between indirect way and IPO is robust.It's confirm to the domestic earlier research result. In research therelationship between the way of family control right achieved and firmperformance, we found many enterprises use pyramid form, this formmagnify the separate degree of cash flow and control right. But in ourresearch the relationship between separate degree and firm performanceis not robust. We found that the real reason that control familyexpropriated private control listed enterprises' interest is different interestbetween control family and listed firm, it's different to many earlier scholars' research.When study control right character endogenous issue, we foundfamily control right characters can affect firm performance and not viceversa. It means that we can improve some characters of family controlright, stock market system to optimize private control listed firms'performance or force family to show the best asset or whole asset to thepublic and share the interest of listed enterprise with massive investors.