Separation Of Control Rights And Cash Flow Rights Under The Corporate Governance Research

Firstly this paper makes an overview on the research about ownership structure and corporate governance. We can make clear that the research in this field is focus on the essence of control rights in the enterprise, i.e. to study the discrepancy between the controlling shareholder's control rights and cash-flow rights by identifying the ultimate shareholder. Therefore, in the next section, we discuss the expropriation of minority shareholders by controlling shareholders when the control rights deviate from cash-flow rights. Meanwhile this paper introduces game theory to analyze whether the multiple large shareholders could limit the expropriation by the largest shareholder. And other large shareholders would choose monitor or collude? In the forth section, we make an empirical study on family control firms in Chinese stock market. We find the discrepancy between the controlling shareholder's control rights and cash-flow rights is not better than those in East Asia. However, we find an interest problem that the regression result is not consistent with the traditional deduction but consistent with the correctional deduction we put forward. This shows the expropriation of minority shareholders by controlling shareholders commonly exist in Chinese stock market. Unfortunately the stock market could not monitor the expropriation of controlling shareholders. Because investors could not identify the discrepancy between control rights and cash-flow rights, they could not know and discourage the expropriation. Moreover the expropriation will be more serious since the investor protection is weak in China.