The Ownership Structure Of China's Private Listed Companies With The Ultimate Controlling Shareholder Behavior

The private listed companies in China's stock market have characterized its own features as the economy develops. This thesis concentrated on the 336 private listed companies in the mainland stock market by 2004. And the private listed companies limited on the companies, which listed in Shanghai and Shenzhen stock market and whose owners are private enterprises or human beings. Based on the principle of ultimate ownership, the paper estimated the relation between the shareholding structures and the corporate performance.In the first part of this thesis, the author analyzed the background of the research. The previous researches were divided into western, East Asia and the China mainland works. Analysis on the surroundings influenced the forming of private listed companies came to find that the Confucianism, the transforming economy together with the separation of stock ownership have great influence on the progress. In the second part of this paper the author compared the ownership structures of the private listed companies with their counterparts in Asia and the state owned listed companies in China mainland and found that the separation of control and cash-flow rights was more serious in these private listed companies. The comparison went further when the private companies were divided into groups. And the results were the initial offering companies and those who own fewer subsidiaries perform better than the comparative groups. The third part of this thesis examined the mechanism patterns of different ownership structures and came to find that the pyramidal holding structure, the cross-holding structure and the dual-class shareholder structure were the main forms for separating control rights from cash flow rights. And especially for the pyramidal holding scheme, which enables the ultimate owner amplify control rights without significantly increase their investment. The forth part of the thesis revealed the ways of the ultimate controllers to influence the firm value of the private listed companies. They pursue their private benefits but not the overall enhancement of firm value. They can do this by controlling the operational, investment and capital-rising decision-making procedures.The last part of this thesis results in some useful policy implications. First, the legal system should be reformed and methods aimed at protecting the interests of the minority shareholders should be put into practice. And business ethic should be added as a necessary dimension to solve this problem. Second, the institution of the stock market must be improved. And the problem of the separation of the ownerships is on the way to be eliminated. Rules for revealing information and supervision should be specific and detailed. And it is also very important to encourage more high quality companies floated into the market so that the overall private listed sector could perform better in the future.