Effect Of Capital Structure Of The Control And Ownership Separation

Based on triangle theory of fraud, the paper selects330private listed companies of Shanghai and Shenzhen stock market as sample, to study the effect of ultimate shareholders on the capital structure of the listed companies in our country.The study found that because ultimate shareholders have motives、chances and excuses, separation of control right and cash flow right are common phenomena existing in private listed companies. Further study shows that ultimate shareholders’ control rights have negative effect on asset-liability ratio and flow asset-liability ratio, the relation between separation of two kind rights and asset-liability ratio-. flow asset-liability ratio is inverse U shape. Considering the bankruptcy threat, ultimate shareholders with more control rights, tend to choose conservative capital structure. The larger divergence between control rights and cash flow rights, ultimate shareholders tend to choose more aggressive capital structure. But when the separation is excessive, ultimate shareholders begin to prevent the bankruptcy threat, and choose conservative capital structure.