The Ultimate Controlling Shareholder's Ownership Characteristic And Corporate Risk-taking

In the world wide, the modern enterprises have the universality of large shareholders' control. Among those,the ownership is highly concentrated in China's listed Firms, and the ownership controlling shareholders are active on corporate governance, they would influence the corporate risk-taking. The nature of ownership is the one of the most important factors that affect the ultimate controlling shareholder's choice of risk projects. The ownership, cash flow rights and the separation degree of the two rights in the ownership of the ultimate controller, lead to the differences among the pursuit of the goal, the size of the cash flow and the degree of the individual and the company's interests. And them would balance the income and cost to make a decision,which is significantly affected by the ownership structure. Alternatively, the suitable level of risk-taking is benefiting for corporate, which is the premise of performance. So,this paper to study the relation between structure character of ownership controlling shareholders and corporate risk-taking is very important to protect minority shareholder and improve the corporate mechanism.Based on the theories, including the theory about ultimate controlling shareholderand corporate risk-taking, and so on, this paper uses the three dimensions contained the Nature of ownership, cash flow rights and the separation of cash flow right and voting right, to describe the ownership characteristic, and explore the influence on corporate risk-taking respectively.And raising the three-research hypothesis, then, design the study program.The paper conducts an empirical research involving subjects in listed Firms of the Chinese A-shares market from 2004 to 2015, which helped to explain the respective relations between the nature of ownership, cash flow rights and the separation of cash flow right and voting right and corporate risk-taking. The main result shows that: (1)the state-owned enterprise is lower level of risk-taking than the non-state-owned enterprise, because of the the state-owned enterprise pursuit the social performance and lacking the effective supervision and incentive mechanism; (2)the cash flow right would have a significant negative correlation on risk-taking. In other words, the controller has more cash flow right, lead to more motivation to govern the corporate,they have a large cash flow rights, benefits from project risk is also higher, their personal interests and the interests of the company to have a high degree of consistency.;(3) The separation of cash flow right and voting right would have a significant U-shape relation on risk-taking. When the degree of separation of the two rights is growing at a relatively low level, the ultimate controller will retain more corporate resources for their own control, and obtain a stable cash flow income through the rejection of high-risk projects,When the separation of two rights at a higher level to increase, the ultimate controller often has larger voting rights and cash flow rights only a small risk, the project cost is low, it will take high risk project to obtain more revenue.