The Empirical Study On The Relationship Of Ultimate Control Rights,Cash Flow Rights And Stock Price Synchronicity Based On The Chinese Limited Company

Two basic functions of stock market are information processing and capital allocation.And the internal mechanism of stock market is realizing the rational allocation of capital by the guidance of stock price.Tobin(1984)argued that the function of the stock market is effective when the stock price can effectively guide the capital allocation.The underlying condition of effective stock market is that the information processing mechanism is effective,which means the stock price can be accurately,timely,effectively and fully reflect the company's unique risk and intrinsic value.The stock price is changing every second,and the volatility of price is affected by three levels,which are market level,industry level as well as company level.As market and industry information are public information,they are easy to get with lower cost.But investors cannot predict the company's investment value through market and industry information.By contrast,only company level information can give chances for investors to make more accurate predictions of the future cash flow and specific risks of the company.For the company level information the stock price reflects,most scholars called it stock information content,while some scholars call it the company quality information.They have the same meaning.Therefore,the more the company quality information the stock price have,the more the content of stock information can we get.In this case,the stock price can more accurately,timely,effectively and fully inflect the intrinsic value of the company.Meanwhile,the operation of the stock market is also more effective.As a measure of stock price index of information content,"Stock price Synchronicity" obtained the approval of the academic mainstream.According to the mainstream academic point of view—the concept of information efficiency,the higher the stock price synchronicity,the more market level information and the less company quality information the price reflects,and the stock information content is also lower.As this point,the stock market efficiency is low.However,as a measure of stock price information content and an important index of market efficiency,the stock price synchronicity has always been at a high level.So why the stock price synchronicity of our country is at a high level?Why the company quality information reflecting in the stock price is low?How to improve the stock price content?These are important topic and worthy of in-depth study in this thesis.Every listed company usually has an ultimate controlling shareholder.Ultimate controlling shareholders tend to dominant the underlying company's operating,financing,investment,dividend distribution and disclosure policy decision through various means,which will directly affect the company's disclosure and information transparency.The intention of the ultimate controlling shareholders will directly affect the company's quality information release,affect the company's stock price information content,and ultimately affect the company's stock price synchronicity.Therefore,based on the information asymmetry theory,principal-agent theory,and control theory,we build a control and cash flow right theoretical analysis framework of the impact of stock price synchronicity.We delve into control rights,cash flow rights and the degree of separation of ultimate controlling shareholders,which have impact of stock price information content.We inspect the correlation between control rights,cash flow rights,separation degree and stock price synchronicity using the empirical data of listed companies in our country.We finally give some suggestions and directions of China's stock market according to the empirical results.This thesis can be divided into six parts,which are introduction,literature review,theoretical analysis and research hypothesis,the research design,the empirical test as well as research conclusion and suggestions.The thesis mainly adopts the methods of combing normative research and empirical research.In the normative research,we have a comprehensive and accurate knowledge of stock price synchronicity,ultimate control,cash flow right and their relations through reading a large number of domestic and foreign journals and monographs,and finally build the hypothesis using the deductive way.In the empirical research,this thesis mainly uses the theory of econometrics and the methods of empirical analysis.We get three conclusions by the empirical research.Firstly,the higher the cash flow rights of ultimate controlling shareholders,the more consistent of interest of ultimate controlling shareholders and listed companies are.At this point,ultimate controlling shareholders will consciously improve the quality of information disclosure and release more company information,resulting lower stock price synchronicity.So when other conditions are constant,the cash flow rights of ultimate controlling shareholders and the stock price synchronicity have negative correlation.Secondly,with the higher extent of separation of control rights and cash flow rights,the ultimate controlling shareholders tend to implement the "empty"behavior,using their control rights to obtain private benefits and infringe upon the medium and small shareholders' interests.This will reduce the company information disclosure,reduce the companies,transparency,and increase the stock price synchronicity.So when other conditions are constant,the separation degree are positively correlated with the stock price synchronicity.Thirdly,the control rights of ultimate controlling shareholder and stock price synchronicity appear"inverted U-shaped "relationship.When the controlling rights at a low level,the"management defense effect" has a leading position,and the interests between ultimate controlling shareholders and small or medium shares are in agreement.In this condition,the stock price synchronicity will increase as the ultimate shareholder's control rights increase.But when the control rights reach a specific level,the "synergistic effects of interests" will have a leading role,and the interests between ultimate controlling shareholders and small and medium shareholders are consistent.Then,the stock price synchronicity will decrease as the control rights increase.This thesis has the following innovative points.For the object of this thesis,there are many researches about the factors of stock price synchronicity.But for the company ownership structure of stock price synchronicity,the studies are mostly about the controlling concentration;few studies related to the company's ultimate controlling shareholders and explore the impact on stock price synchronicity.Oh the one hand,this thesis provides a new thinking of the influence factor of stock price synchronicity.On the other hand,this is a new evidence of the concept of information efficiency.For the research content,most literatures on the study of ultimate control structure are based on the company's internal,for company's external influences,especially on the influence on the stock market of Chinese is relatively less.For research method,this thesis improves the newer model abroad,including comprehensive explanation variables and control variables,and sets up reasonable proxy index,resulting a more scientific and reliable conclusion.