The Research On The Effect Of Political Association And Separation Of Cash Flow Rights And Control Rights On Family Listed

Foreign scholars have found that the family will often deviate from the ultimatecontrolling person "with same rights" and "one share, one vote" principle of reciprocity,and take pyramid ownership structure, cross-shareholdings and other ways to achievethe separation of control rights and cash flow rights, in order to achieve access to thepurpose of private benefits of control, and this led to a lower value of the company.Meanwhile, we also find that the political association as an informal alternativemechanism can compensate for weaknesses of ownership and property rights in thefamily firms. With the deepening of China’s economic reform, our family companiesare also growing, and play an important role in economic development. Therefore,whether there is the separation of control rights and cash flow rights in our familycompanies? If there is the separation of control rights and cash rights, then whatimpact has it on the value of family companies? And whether can the politicalassociation alleviate the impact of the separation of control rights and cash flow rightson family corporate value?This paper analyzes the influence of the separation of control rights and cash flowrights, political association on family corporate value, by using data of ChineseA-share family companies listed in Shanghai and Shenzhen Stock Exchange from2010to2012. The research has concluded that:（a）the degree of separation of control rightsand cash flow rights is negatively correlated with the value of the fami ly firms, that is,with the degree of separation of control rights and cash flow rights increasing, thevalue of family companies is smaller;（b）the political association is positivelycorrelated with the value of family companies, and the higher chairmen or seniors offamily companies has political level, the more favorable to corporate value;（c）establishment of political association in family companies will help alleviate thenegative impact of the separation of control rights and cash flow rights on corporatevalue; with the improvement of political level, the degree of mitigation is alsogradually strengthened.Therefore, this paper puts forward some policy suggestions from four aspects, suchas sounding the minority shareholders protection mechanism, improving theinformation disclosure system, actively expanding the good relationship with thegovernment and improving the market mechanism. This has an important theoretical and practical significance for the formulation of economic policy and the governm ent’sstrategy for the family companies.