Research Between Ultimate Control And The Corporate Performance

In recent years, the private economy act as the most dynamic light-spot in nationaleconomy, has become an important component in China’s socialist market economy andan important force in promoting economic growth. In2010, Although our economyexperienced crucibles by the slowdown in world economic growth, domestic naturaldisasters, lots of major challenges, but still maintains a steady development trend. In theimportant period of economic development, the private economy and the small andmedium-sized enterprise surely will become an important driving force in China’seconomy, and will have a bigger development under the laxer policy and more fairmarket competition environment. However, from the current situation, the Chineseprivate listed company’s management condition overall is worse than the others, theownership and control is not completely separated, the ownership concentration ishigher, and the key control phenomenon is more serious. Therefore, doing researchesinto the private listed company’s agency problems between ultimate controllingshareholders and minority shareholders, is of great significance to improve thegovernance structure of listed companies, as well to ensure the smooth development ofprivate enterprise.Since1932Berle and Means made the pioneering research on the relationshipbetween the company ownership structure and enterprise value，the relationshipbetween the ownership and control of the company and enterprise value graduallybecome a hotspot in economics literature. Due to the high dispersion of enterpriseownership in Berle and Means paradigm, the corporate governance research leading bythis theory often do not detailed distinguish differences between residual claims andresidual controls. LLS (1999) and Claessens, etc.(2000)’s research achievements shookBerle and Means’s research paradigm, which has been dominated for more than half acentury, and guided the key research of Corporate governance from enterprise managersto controlling shareholders who have a large number of shares and grasp enterprisecontrols. LLS (1999)was the first one to find out who has the most and final ownershipby tracing layers of ownership chain, and not directly served the biggest shareholders asthe company’s controlling shareholder, which explained the effect of interestsdifferences between ultimate controlling shareholders and inferior dormant-partner oncorporate value more appropriately.This paper selects the listed private companies from2009to2011as the sample. The first part firstly summarizes domestic and international research status about theultimate control, providing some ideas for this study; The second part defines conceptsrelated to control, and introduces the theoretical foundation of this paper, making ananalysis of the current situation of ultimate control rights to our country private listedcompanies. The next, this paper makes an empirical research on the relations betweenthe related variables of ultimate control and company value by establishing regressionmodel, also making multivariate linear regression by introducing cross variables. Thethird part of this paper is the summarize of the research conclusions, as follows: cashflow rights and control has a significant positive effect on enterprise performance; Theseparation of cash flow rights and control has an obvious negative effect on enterpriseperformance; From the comparison by introducing virtual variable to distinguishbetween direct and indirect listed companies listed, we find that, compared with indirectlisted company, directly listed private companies will weaken the negative effect of tworights separating degree making on corporate performance. Again introducing virtualvariable to distinguish between direct control and pyramid control of private company,we find that, compared with direct control mode, pyramid control mode will weaken thepositive influence of ultimate control making on corporate performance.This paper finally puts forward the relevant policy recommendations, and pointsout the defects existing in the paper, prospecting the direction of the further research.The system research combined with theoretical analysis and empirical analysis, have acertain reference and practical value for our country private company’s healthydevelopment.