Ultimate Controlling Shareholder, The Separation Of Two Rights And Credit Rating

In recent years, bond financing is becoming an important financing tool of the listed companies, there are serious information asymmetry and agency problems in our country, so investors are more dependent on the credit rating. Credit rating is a direct signal transmission, make investors better understand the credit risk of companies and bonds, reduce the information asymmetry between financiers and investors, by the research of debt cost, this article means to analyze the relationship between interests expropriation cost constraints of the ultimate owner and the credit rating. The Conclusions of this paper are as follows:The control right of the ultimate controlling shareholders and the bonds credit rating present inverted "U-shaped" relationship. The control right and the issuer credit rating also present inverted "U-shaped" relationship. When the shareholding is relative decentralized, there are higher agency costs between professional managers and shareholders. With the gradual concentration of shareholding, The ultimate shareholders have the ability to monitor the managers, thus enhance the value of the company. When above a certain level, ultimate shareholders may gain the private interests of the control rights through interests expropriation, interests expropriation will increase the risk of financial crisis and debt default of the company. The cash flow right has a significant positive relationship with the issuer credit rating. Cash flow right has a positive "incentive effect", constraints the ultimate controlling shareholders’interests expropriation. The separation of the control right and the cash flow right has a significant negative relationship with the bonds and issuer credit rating. The greater separation of two rights, the greater motivation of the ultimate controlling shareholders to empty the listed company, it will increase the risk of financial crisis and debt default of the listed company and decrease the company’s credit rating. In the non-state-owned listed companies, The separation of the two rights has a greater impact on the issuer credit rating.