The Relationship Between The Firm Value And The Pyramid Shareholding Structure : Evidence From Private Listed Companies In China

As is known to all, the ownership structure of the listed companies affects the control of the company, also it has a significant influence on the value of the listed companies.Especially for the controlling shareholder and the ultimate controlling shareholders, the shareholding structure directly affects the management of control right.Therefore, the ownership structure of the listed companies has become the important focused question of the research on corporate governance.In the study of the private listed company’s equity structure, the pyramid shareholding structure is common shareholding structure category in Chinese private listed firms, this kind ownership structure has its particularity, its biggest feature is the dislocation between the cash flow right and the control right of the ultimate controlling shareholder.As a result with this way the controlling shareholder can get hold of great control through a relatively low cash flow right, which will stimulate the tunnel behavior of the ultimate controlling shareholder, this kind of behavior does harm to the small and medium shareholders, also brings serious negative influence on the listed company value.To improve the governance structure of the private listed companies is of great positive significance in promoting the value of the private listed companies.This paper has go through lots of literature by many scholars about the pyramid shareholding structure of the listed company,using the descriptive statistical analysis and the empirical study, this paper studied the relationship between the pyramid shareholding structure and corporate value of China’s private listed companies.First of all, the paper selected the private listed firms from 2012 to 2014 as the sample of the study, the paper has a detailed explanation about the theoretical basis for the research, and by using the sample’s data of the private listed companies, the paper carried out a descriptive statistical analysis on the pyramid shareholding structure in order to find the eigenvalues of the pyramid shareholding structure of the private listed companies.Secondly, the paper’s empirical study’s data comes from the unbalanced panel data of the Chinese private listed companies during 2012 to 2014, and there are six characteristic variables of the pyramid shareholding structure, namely the cash flow right, the separation degree of two rights,the vertical hierarchy and the horizontal dimension of the pyramid shareholding structure,the ownership concentration and the equity balance degree six explained variables indicators in total, the firm value is the explained variable, using tobin Q value and ROE to estimate,there are four types of control variables.Moreover,the paper build a multiple regression model for correlation of inspection and testing so as to empirically research the relationship between the pyramid ownership structure and corporate value.Finally,according to the empirical results,the paper has these arguments:1) the cash flow rights and corporate value of the controlling shareholders has an inverted u-shaped relationship;2) The separation degree of two rights of the pyramid shareholding structure is negatively related to the firm value;3) The longitudinal hierarchy of the pyramid shareholding structure has significant negative correlation with the firm value;The horizontal dimension of the pyramid shareholding structure is positively related to the enterprise value;4) the relationship between the ownership concentration and the firm value of the private listed companies is u-shaped;5) The equity balance degree and the firm value of the private listed companies are positively related.