Ultimate Control Right, Cash Flow Right And Enterprise Performance

The central that a lot of unstandard behaviors of ssecurity market of our country is ultimate control right.La Porta et al(1999) first proposed the concept of ultimate control,he pointed out that as a result of separation between cash flow and control rights,when we analyze the issue of ownership structure,we should find the ultimate controller of enterprise through the chain of ownership,rather than simply to see the first major shareholder as the controlling shareholder. The control rights of ultimate controller often exceed their respective ownership in the company, which result in agency costs between ultimate control shareholders and small and medium-sized shareholders,and affect enterprise performance.In the presence of ultimate controller,what relationship the ultimate controller of the ownership(cash flow rights) and corporate performance have,and how the separation of the ultimate control and cash flow rights affect business performance,this study attempts to answer these questions.The study chooses panel data of listed companies in the China's manufacturing sector from 2004 to 2007 as research objects,and researches the above-mentioned issues through a combination method of empirical study and normative study.The results show that,cash flow rights of the ultimate controller in the manufacturing sector listed company and the enterprise performance show a kind of significant positive correlation,that is,the higher cash flow rights, the better enterprise performance,and the more enterprise value;The separation of ultimate control and cash flow rights and enterprise performance show a kind of significant negative correlation,that is,the higher the degree of separation of powers,the worse the performance of listed companies.In the sub-samples study we found that compared with the state-owned listed companies,the private-owned listed companies have the higher degree in the separation of two kinds of powers which also have larger impact on enterprise performance.On the basis of empirical research,the study proposes corresponding policies and recommendations from the aspect of the supervision of listed companies and the protection of small and medium-sized shareholders based on our research results.At the same time,we point out some shortcomings in the study.