Pyramids Holdings And Corporate Value

La Porta had studied the equity structure of 279 listed companies of the developed economies in the world. He found that except in the USA, UK and Japan, whose equity structures were widely-dispersed, there existed ultimate controlling owners in most of the other countries'listed companies. In order to separate the ultimate control rights and the ownership rights, the ultimate controlling owners usually apply the Pyramidal Structure, Cross Ownership and Dual Class Equity to establish a control chain. The Pyramidal Structure is common in China's stock market. Is there any special relationship between this equity structure and the discount of the company's value? If so, how relevant are the two? Is the separation relevant to the company's value? Is the number of controlling layers affecting the value of a company? Are the different identities of the ultimate owners influencing the company's value?This paper is to find the answers for those questions through thorough and systematically empirical research, and to provide more evidence for the pyramidal structure. Three conclusions are drawn from the research: Firstly, both the ultimate control rights and the ownership rights are positively relevant to the value of a company. Secondly, due to the relatively concentrated structure of China's equity system, the effect of the controlling layers upon the degradation of company's value is not obvious. Lastly, different natures of the ultimate owners influence the company's values independently.