State-controlled And Study On The Relationship Between The Cost Of Equity Capital

In1958, Modigliani and Miller setting off a very Famous modern about capitalstructure theory,pepole called it MM theory. The theory set off the upsurge of domesticand foreign scholars of modern corporate capital structure. La Porta et al (1999) studied theownership structure of the developed countries, found that outside the Anglo-Americandeveloped countries, companies usually have a concentrated ownership structure, thus, theultimate property rights theory been the first proposed as a system theoretical concepts. LaPorta believed that the discrepancy between ownership and control rights of the ultimateowner was essentially principal-agent problem between managers and owners,turned intothe problem between ultimate controlling and minority investors. La Porta also noted thatthe ultimate controlling and the cost of equity capital have some association.This paper try to discuss the relationship between ownership structure and the cost ofequity capital with507samples, the core content includes two aspects: the state-controlledand the cost of equity capital. First, the literature reviewed the theoretical about theredefinition of the concept of state-controlled. Second, in contrast to the estimate model onthe cost of equity capital at home and abroad, the paper selected domestic scholars in theirstudy of state-owned holding enterprises commonly used model of GLS model, andestimates of the cost of equity capital using MATALAB. Third, the paper establish twodifferent assumptions and set off the corresponding empirical model, after the initialprocessing of the sample enterprises data, the paper using SPSS software for multipleregression analysis between variables correlation. Finally, we obtained the sameconclusions as initial hypothesis:(1) When the government become the ultimate ownershipin the company, the discrepancy between ownership and control rights of the ultimateowner have a positive relationship with the cost of equity capital.(2) When we settate-owned shares as5%of width changes under45%proportion,it can be found that thediscrepancy between ownership and control rights of the ultimate owner have a a positiverelationship with the cost of equity capital. When state-owned shares exceed51%, theequity cost of capital with which the relationship becomes not obvious.This article have three innovation:(1) On the one hand, I want to discuss when thestate became the untimate ownership, how the relationship between the discrepancy ofownership and control rights was changed.On the other hand, I want to investigate whenthe proportion of state-controlled listed companies changed, if the cost of equity capitalhave some changes.(2) The publicly listed companies to disclose information and the splitshare reform is completed as an opportunity to the corporate existence of the groundbreaking research in the listed company to state-controlled shareholding structure,how the association changed between the cost of equity capital and ownership structure.(3)This study given some concluded can inspirate on the ownership structure of thestate-controlled enterprises,let them to set up and reform. Also this paper can give somesuggestions for further study,which is about the ultimate controlling shareholders oncorporate governance.