The Empirical Study On The Factors Affecting The Private Control Benefit In Chinese Public Listed Company

It’s common to see that controlling shareholders harm other shareholders’profit. Foreign scholars pay attention to this phenomenon earlier than domestic scholars. They classify control benefit as shared benefits and private benefits, obtaining some achievements on the factors affecting private control benefit. Chinese scholars’ conclusions are different with foreign results as our stock market has a short history, and suffer a special shares reform (split-share reform). In current domestic research, scholars generally use net asset value measuring the level of private control benefit in place of public market value, because study samples are partly or fully composed of control transformation of non-trade shares. But the way goes against the core assumption of large equity premium method, which leads to big difference with foreign scholars’results.Since the non-tradable shares reform, the stock market has changed a lot. The reform has almost been completed by December26,2006. Nearly80percent of the floating stock could be traded in the market until2009. And this ratio increased to90percent until November,2010. The significant change makes market value after deal announcement become available in measuring share value. In our paper, we choose seven variables to analyze the influence factors of private benefit, such as transaction deals, ownership structure, ROE, company size, scale of independent directors, political connections and industry characteristics. The result shows that the blockholders counterbalance and political connections play positive roles in private benefits of control, while the scale of transaction deals, ROE and independent directors play negative roles.