The Correlation Study Of Private Benefits Of Control And Corporate Performance Of Chinese Listed Companies

The current corporate ownership structure of most of the countries is very concentrated in the world and its ownership and control are not completely separated. Controlling shareholders holds effective control over the company management. Due to this fact, in the companies possessing a high concentration of ownership structure, the benefit conflicts between controlling shareholders and minority shareholders are the main agency problems. As people’s realization to the universality of ownership concentration, it’s become a new hot spot to solve the benefit conflicts, while the study of private benefits of control has thereby become a core issue in this area. Currently, the capital market in China is a developing "Emerging and transitional" market. The corporations’ownership structures are highly concentrated, the laws of protecting minority shareholders’interests are not in place and the external supervision systems are imperfect. Those make it easy for controlling shareholders, who control the corporation, to grab private benefits. This article aims at exploring a corporate performance optimization path with private benefits of control existing, and then improving the corporate governance structure to facilitate the governance efficiency.Firstly, this paper reviews the research literature of the domestic and foreign scholars about the definition, measure and influencing factors of private benefits of control and draws inspiration, which is studying the correlation between private benefits of control and the corporate performance is indispensable.Secondly, relying on the three basic theories of "incomplete contract theory""internal control theory" and "asymmetric information theory", this article analyzes the root causes of private benefits of control, and explains it by combining the behaviors of the controlling shareholder and the theories, and at the same time explains the realistic background of private benefits of control; Subsequently, the connotation and denotation of private benefits of control, the corporate performance metrics and the three private benefits of control source acts. which are phenomenon mergers and acquisitions, connected transaction and the occupation of funds, are analyzed.Again, based on the existing theoretical studies as well as the private benefits of control’s actual impact on the corporate performance, the article launches some assumptions, respectively, to establish regression analysis models. Model Ⅰ is established to explore the phenomenon of the transfer of control process. It paves the way for later research; Model Ⅱ and Model Ⅲ are the main models. Model Ⅱ is to study the concrete relationship between private benefits of control and corporate performance and how to govern this part of the proceeds in corporate governance; Model Ⅲ is to analyze what impact factors of private benefits of control factors affect corporate performance and to seek the company performance optimization path.Finally, the empirical model test results show that the significant factors in Model Ⅰ are the proportion of the equity transfer, the three-year average return on net assets before the equity transfer, the size of the company, asset-liability ratio, the proportion of tradable shares. The empirical results of Model Ⅱ show that the corresponding partial correlation coefficients are significant, and the F value of the model also passes the significant test and the results also show that the correlation of study objects in Model Ⅱ is an inverted "U"-shaped, that is, the influence of private benefits of control on corporate performance changes from promotion to suppression. The empirical test results of Model Ⅲ show that the proportion of transferable equity, company size and the proportion of outstanding shares all have a significant effect on corporate performance. This provides some path to improve corporate performance.Based on the empirical findings, taking into account the actual situation of China’s listed companies, this article gives some policy recommendations as following:①perfecting the system of legislation to protect property rights of minority shareholders;②strengthening the reputation incentives mechanism of the largest shareholders;③optimizing the equity structure;④regulating the information disclosure mechanism;⑤perfecting regulatory mechanism.