The Pyramid Structure Of Ultimate Control, Cash Flow Rights And Corporate Performance

Since the end of the1990s, some academics represented by La Porta found in most of countries ownership concentration is more common and Listed company has an Ultimate Controller in a concentrated ownership structure. The control rights owned by the Ultimate Controller may probably exceed his cash-flow rights. They investigated the influence of Ultimate Controller’s cash-flow rights and control rights on firm performance by analyzed his control rights and cash-flow rights as well as the deviation of control rights and cash-flow rights.Learned from the researches of La Porta etc., this thesis attempts to investigate how control rights and cash-flow rights influence firm performance in the perspective of Ultimate Controller. This analysis relies on the sample provided cross-sectional data of561Private listed Companies controlled by individual or family as Ultimate Controller in Shanghai and Shenzhen Stock Exchange in the year of2009and2010and tests the links of cash-flow rights, control rights and firm performance in empirical method. Using return on assets (ROA) as a proxy for firm performance, this thesis put forwards three hypothesizes. The main conclusions are following:(1) cash-flow rights and control rights of Ultimate Controller (individual or family) are positively associated with firms’ performance;(3)there is no strong evidence that the deviation of cash-flow rights and control rights has negative effect on firms’ performance.