Private Benefits Of Control And Its Factors Of Public Corporations In China

The development of equity division reform and full circulation of Chinese stock market provide a new platform to use the "block premium" method to measure the private benefit of control, as now we can use the average trading price of a stock in the open market as a basic to represent the company value for all common shareholders. The focus of this paper is whether the market side can effectively reflect the benefits of control or not and which factors have a significant effect on the benefits of control after the reform.The paper select647negotiating trades of listed companies from Jan1,2000to December31,2014as samples, which cover the "non-tradable shares reform" in2006. And use two different indicators representing the value of the stock to measure the level of private benefits of control of listed companies in China, so as to make better comparison with the past domestic and foreign research. The use of selected two typical indices of model calculations control of listed companies in China’s private income levels. The results show that the traditional adjusted net assets per share of the average premium rate calculated on the basis of the model reached65%, well above the average of other scholars-30.5%,6%and15%of the world average. But control of the circulation model to calculate the average transaction price in the market based on the average discount rate derived from up to60%, even after the share reform sample average discount rate has reached39%. The difference in the extent of the discount window period is not selected by the event generated.Further to analyzing the influencing factors, this paper bases on existing research and focuses on three aspects including the nature of equity, corporate governance structure and profitability of private control. The results turn out that the equity is relatively high return on equity trading and non-tradable shares homogeneous business transfer; the ratio of the largest shareholder is positively correlated with income and shareholders’ equity ratio of two to ten and this negative correlation; and hands ratio, ROE and cash sales profit rate and other factors were associated with a control premium is also showing a positive correlation, while the company’s market capitalization and earnings will be lower control premium.The discount puzzle may mainly due to the "marketability liquidity discount"--because the market mechanism and control of the transaction is not complete and the transferring market is not very active related. The analysis of large shareholders control premium factors are Instructive to better protect the interests of small investors.