Research On The Relationship Between Separation Of Cash Flow Rights From Control Rights And Family Corporate Value Under The Institutional Environment

Foreign scholars all found that most ultimate controlling shareholders of familycorporations obtained the larger control rights than their cash flow rights through themethod such as pyramid structure, which created a new "separation of two rights ".This increased the agency cost of Family Corporation and had seriously influence onthe family corporate value. They also introduced external institutional environmentand found that a good institutional environment was conducive to inhibit the negativeeffect of the separation of two rights on the value of the company. With the deepeningof reform and opening up, Family corporations in the Chinese social system andeconomic environment are growing in our country. How about the separation in ourcountry? And how about the influence on the family corporate value? Could theexternal institutional environment in China truly protect the interests of minorityshareholders, protect family corporate value promotion?This paper takes2006-2009family listing Corporation in mainland china assamples and respectively studies the relationship between separation of two rights,institutional environment and company value through normative and empiricalmethods and examines the role of the institutional environment in the relationsbetween the separation of the two rights and the value of the company. The resultsshow that the separation of the two rights has a negative relative influence on familycorporate value, institutional environment has a positive relative influence oncorporate value, and the improvement of institutional environment can mitigate theformer’s negative relative effects. The relationship between the proportion ofindependent directors and corporate value is not significant or significant level is low,independent directors did not play its proper oversight role.Therefore, this article puts forward six policy suggestions, including optimizingthe equity structure, improving the system of the protection of minority shareholders,perfecting the system of information disclosure and so on. We hope they could beconducive to the improvement of corporate governance and create better externalinstitutional environment to help the corporation develop healthily and orderly.