| The worldwide studies about equity structure showed that In addition to the UK and USA, whose ownership structure appear highly fragmented, other countries’ listed companies’ equity structures are centralized, most of them have the ultimate controlling shareholder. In order to master greater control over the use of a smaller cash cost, the ultimate controlling owners commonly use the Dual Class Equity, Cross Ownership, and Pyramidal Structure to separate the ultimate controlling right and cash-flow right. In China’s stock market, Pyramidal Structure is very prevalent, especially in the family holding listed companies. Is there any influence on the company value which the special equity structure brings to? And how it affect? After the non-tradable share reform, how does the separation from control right to cash-flow right affect the company value? These issues become the subject of this paper.The separation of control right and cash-flow right in China’s family holding listed companies is more and more general, accompanying corporate governance issues are more and more serious. In recent years, the cases about the controlling shareholders hollowed listed companies were unabated. It has made serious damage to normal social and economic order. This paper select571family holding listed companies, a total of1245samples in China’s A-share market from year2008to2010, refer the econometric models of domestic and foreign researches, do the research about how the control right, cash-flow right and their separation of family holding listed companies in China affect the company value. This paper will not only expand the existing research, but also provide some useful suggestions on making reasonable arrangements for the ownership structure and enhancing the value of company.Based on the fundamental theories, this paper does theoretical and empirical research on the affect which the separation brings to the company value. To begin with, this paper related to the international scholars’ study was reviewed, summarized and commented on. Subsequently define the basic concepts involved in this article, describe the theoretical basis of this article——the Principal-agent theory and the Private benefit of control theory, and a theoretical analysis on the separation of two rights impact on company value, as well as the specific characteristics of the company. Then use the A stock market listed companies from year2008to2010family holding companies’data for empirical research, including the distribution and variation of Chinese family holding listed companies’cash-flow right, control right, the separation coefficient, and their influence coefficient on the family holding listed company value, as well as the share reform is completed, the lifting of the ban period, changes in circulation stock listing a large number of two rights brought by the separation factor on the value of the company. In the end, this paper sums up the conclusions of this study, points out the shortcomings of this research, and puts forward some suggestions of this article.This paper is divided into five chapters, each chapter follows:Chapter1Exordium:This chapter first introduces the background and significance of this research, followed the ideas and the framework of the entire article are described, and then describes the research methods.Chapter2Research ReviewThis chapter first reviews the research both foreign and domestic about "the impact of the separation of China’s family holding listed companies on the company value". Then make a synthesized commentary on these researches, and explain how the existing studies guide on this paper.Chapter3Theoretical AnalysisThis chapter is divided into three main parts:first define some concepts which are related to this study, include the family holding listed company, the control right, the cash right, and their separation. Next elaborate the theoretical basis of the whole article—the Principal-agent theory and the Private benefit of control theory. Last analyze the effect that the separation makes on the company value by theoretical way.Chapter4Empirical ResearchThis chapter begins with the hypotheses on the basis of theoretical analysis. And then make a description of the data sources, the sample selection, and variable settings in this paper. Followed descriptive statistical analysis is carried out for each variable. This paper introduces the Tobin’s Q Ratio as the measure of the value of a company into the econometric model, tests the effect that the separation makes on the company value through linear regression analysis, and analyze the empirical results in the end.Chapter5Conclusions, Ideas for Improvement, and Issues to be examinedThe conclusions of this study are summarized in the beginning of this chapter. And then state the inadequacies of this study which make a clear direction for the follow-up study. Finally put forward some suggestions for the conclusions of this study.The empirical results show that there is appositive relationship between cash-flow right and the company value of China’s family holding listed companies. Cash-flow right is the guarantee of the company’s future cash flow to shareholders; the proportion of cash flow rights owned by the ultimate controlling shareholders is more, their own interests and the interests of listed companies are more closely related. The ultimate controlling shareholders have an incentive to improve the operating status of the listed companies, as well as the performance of them. I find that the company value is positively correlated with the ultimate controlling shareholders’control rights in family holding listed companies of China. On the one hand, a large proportion of control rights guarantee absolute influence operational decisions of the ultimate controlling shareholders of the listed company, which facilitate its transfer listed company resources, encroaching on the interests of minority shareholders. But on the other hand, the controlling shareholders can carry out effective supervision on management in the concentrated equity structure, thus can constraint management’s opportunistic behavior. It can reduce the entrusted agency costs between owners and operators, and produce a positive effect on firm value. Interaction of the positive impact the ultimate controlling shareholders involved in corporate governance plays, and the negative impact they seize the benefits of listed companies, makes control right be positively correlated to the company value overall. The company value and the separation are negatively related to. The controlling shareholders can rely on smaller cash-flow rights to obtain relatively large control rights, which contribute a motivation to seize the benefits of listed companies. The ultimate controlling shareholders transfer the resources of the listed company which depends on their control rights. Because of their cash-flow rights are limited; they just bear the limited loss. The separation provides the motivation of seizing the benefits of the listed companies, also reduces the difficulty of this behavior, which increases agency costs and makes a negative influence to the value of listed companies. Empirical study shows that the coefficient of separation of the companies who have a larger proportion of outstanding shares has a significant creased, compared with the companies who have less proportion of outstanding shares. It proved that when the ultimate controlling shareholders and other enterprises controlled by them have hold a larger proportion of non-tradable shares, their separation play a greater negative impact on the value of the company. The non-tradable shares’cost is very low, and do not fluctuate with the market, the controlling shareholders are more strongly motivated to occupy the interests of listed companies through the separation. After the non-tradable shares reform, the ultimate controlling shareholders’benefits and the listed companies’value increasingly close, which weakened their expropriation motivation.The main contributions of this paper are:(1)Theoretically, thoroughly investigate the mechanism of action which is behind the effect that the separation makes on the value of family holding listed companies in China. This study in the country is not an entirely new area of research, but full of controversy. Family holding listed companies in China started late, who have a high-speed development in the beginning of this century. Listed companies’information disclosure system is not perfect in China, which indirectly lead to different results in this field in the domestic research. The past relevant empirical research has focused on revealing the relationship between the control right, cash-flow right and their separation and the company value. Analysis on the formation of these relationships is less.In this paper, there is a systematic exposition of the theory.(2)In empirical research, I consider about the institutional factors of China: After the non-tradable share reform which was launched in2005, there is a great number of tradable shares in China stock market. The proportion of tradable shares is introduced into the econometric model as a control variable. Thus this paper combines relevant study with market economy the Chinese way, which can realistically reflect the relationship between the equity structure and the company value of China’s family holding listed companies. It can enrich the literature in this area. |
PDF Full Text Request