The Absence Of Actual Controllers,Nature Of Property Rights And Operating Performance

Since the reform and opening up,China’s capital market and shareholding enterprises have achieved rapid development.At the same time,along with the in-depth promotion of a number of national policies such as the equity share reform and the mixed ownership reform,the market economy has shown vigor and vitality.The stateowned economic system,which has always dominated the national economy,has undergone radical changes under the impact of marketization.As private enterprises continue to grow and foreign investors and institutional investors continue to come in,the former "one share dominant" shareholding structure of the state-owned component is gradually disappearing.The corporate shareholding structure is increasingly diversified,complex and fragmented.Companies without actual controllers emerged in this circumstance.According to the statistics of CSMAR database,as of the end of 2020,the number of A-share listed companies without actual controllers in China has reached283,accounting for more than 5%.As an emerging capital phenomenon,whether the absence of actual controllers will have an impact on the management of enterprises and how we should effectively deal with such impact to better promote the smooth and orderly development of enterprises will be an important problem for academics and practitioners to focus on and consider.Taking the existence of actual controllers in listed companies as the independent variable,the principal-agent theory and property rights theory as the main theoretical support,this paper,by means of empirical tests,tries to explore the correlation between the absence of actual controllers and the operating performance of enterprises and whether the relationship will be different under different property rights nature.It is found that the absence of actual controllers leads to worse operating performance and this result is significant only in non-state listed companies.Further analysis of the mechanism of action reveals that the absence of effective control leads to an intensification of conflicts between external shareholders and internal management,a significant increase in the first category of agency costs,deterioration in corporate governance and the probability that the company will be penalized for violations,thus causing a decrease in operating results.A study based on a no-actual-controller governance perspective found that a higher percentage of independent directors and a higher level of marketization would weaken the negative impacts of actual controller absence on operating performance.In addition,this paper empirically tests the correlation between the absence of actual controllers and the quality of internal control,and the external audit opinion.The similar theoretical basis and mechanism of action again strengthen the reliability and authenticity of the findings of this paper,which provides direction and guidance on how to effectively mitigate agency problems and improve corporate governance in enterprises without actual controllers.