The Impect Of Ultimate Ownership On Choice Of Debt Maturity Structure

Since the concept "ultimate controller" brought out by La Porta (1999), scholars have found that there was a phenomenon of ultimate controller of corporations in most of the countries. The ultimate controller controlled the corporation by dual-class equity, pyramids-shareholdings or cross-shareholdings and leaded to a deviation between the control right and the cash flow right. This deviation make the ultimate controller can achieve the goal of controlling the company actually with smaller share and facilitate expropriation. The main conflict in corporate governance was not the conflict between managers and shareholder, but the conflict between the inner controlling shareholder and the outer investors. How to mitigate the agency problem has been the company a hot issue in academia. The recent studies show that the debt maturity structure of company can reduce the degree of creditors' being expropriated by ultimate controlling shareholder.The paper adopted the sample of the 1221 companies in 2009 listed in Shenzhen and Shanghai, and applied methods like OLS, non-parametric tests to empirically investigate the impact of ultimate control shareholder on the choice of debt maturity structure by controlling related variables. It is found some significant evidence. (1) the degree of separation of ultimate controlling shareholders' control right and ownership is significantly negative correlation with debt maturity; (2) The existence of Check and Balance of Stock Ownership can restraint expropriation of controlling shareholders; (3)The stated-owned-corporation have more long term debt than non-stated-corporation; (4)The more layers of Pyramid, indicating of the pyramid ownership structure are more complex and the expropriation of the ultimate shareholder are more hidden, the more long term debt were used.(5) When the proportion of the board of direct with related to the ultimate shareholder were higher, the ultimate shareholder could easier to influence the corporation'decision to choose more long term debt to facilitate the expropriation of the ultimate shareholder; (6) When the CEO of the corporation related to the ultimate shareholder, the corporation would use more short term debt to reduce the expropriation of the ultimate shareholder.At the last part, according to the result of the empirical analysis, the author gives some suggestions on optimizing the capital structure of Chinese listed companies.