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China's listed companies pyramids structural characteristics of

Author: JiaoXueLing From: www.yourpaper.net Posted: 2009-04-01 10:09:47 Read:
[Abstract] In this paper, the 2004-2005 listed companies in Shanghai and Shenzhen stock 1779 as samples, from four aspects of the ultimate controlling shareholder type, level, ultimate cash flow rights and control rights and cash flow rights separation extent of listed companies pyramid The shareholding structure characteristics analysis of the reasons for the formation of the difference from the perspective of the institutional background.

LLSV (1999) groundbreaking departure from the ultimate ownership, in-depth study of pyramids, pyramids found the ultimate controlling shareholder control rights and cash flow rights separation, resulting in the infringement of interests of minority shareholders motivation, and ultimately damage the company value. In the study, LLSV (1999) on the pyramids strictly defined standard. Whether these standards are reasonable? Applicable to listed companies in China? Separation of control rights and cash flow rights can fully reflect the structure characteristics of pyramids? The clarity of these issues is of great significance for the study of the influencing factors and the economic consequences of the pyramids.

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Pyramids defined to

LLSV (1999), pyramids, cross-shareholdings, double stock are the ultimate controlling shareholder of enhanced control in order to achieve the separation of control rights and cash flow rights, and from this perspective, the pyramids made stringent defined standards.
LLSV (1999) pointed out that in the A-B-C control chain, if A holds 100% equity interest in Company B, and B Holdings C, this structure is not considered pyramids. This is actually the separation of ownership and control rights and cash flow as a measure of the potential standard pyramids. However, according to Ye Yong Hu (2005) study, over 50% of China's listed companies control rights and cash flow rights are not separated. Foreign scholars also found in Germany, Canada, Turkey, Brazil, pyramids not maximize the use of in order to achieve a high degree of separation control rights and cash flow rights (Lefort and Walker, 1999; the Attig Fischer and Gadhoum, 2003); Demirag and Serter, 2003; Valadares and Leal, 2001). In this regard, the paper argues that the ultimate ownership of the pyramids is a company formed through indirect ownership chain is not merely the ultimate controlling shareholder to strengthen control, control rights and cash flow rights separation tools, to determine the separation of control rights and cash flow rights whether it constitutes a Pyramid shareholding biased.
LLSV (1999) also provides that at least one listed company in the control chain between the downstream listed company and the ultimate controlling shareholder, or they are not considered pyramids. Liu Shao Jia et al (2003) study found that in accordance with the above requirements, the pyramids system in our country by the National indirectly controlled listed companies, only 15 listed companies to meet the requirements, the controlling shareholder of the remaining 821 companies are unlisted state-owned enterprises and institutions. Liu Shao Jia (2003) broadens the definition of the pyramids, the unlisted holding company included in the study.
Based on the above analysis, this paper pyramids defined as follows: pyramids are formed through indirect ownership chain ultimate ownership, shareholding level of 10% for the control standards the pyramids required to meet the following conditions: First, the The most downstream of listed companies has an ultimate controlling shareholder; Second, the ultimate controlling shareholder must both be the largest shareholder of the company of each intermediate layer in the control chain.

Second, the pyramids structural characteristics of

Domestic scholars on the ownership structure characteristics mainly from two aspects: First, research the type of controlling shareholder; is to study the degree of concentration of ownership, including the proportion of the largest shareholder ownership concentration. On this basis, combined with the particularity of the pyramids, the structural characteristics summarized as a vertex and three dimensions. A vertex is at the top of the pyramid there are the ultimate controlling shareholder, refer Level three dimensions, the separation of the ultimate cash flow rights, the ultimate control rights and cash flow rights.
(A) the classification of the ultimate controlling shareholder
The ultimate owners of the ultimate controlling shareholder of listed companies. Different type of ultimate controlling shareholder, the motivation to build pyramids there may be differences the resulting pyramids differences in other characteristics. Scholars use different criteria to classify the ultimate controlling shareholder. LLSV (1999) will be divided into family or individuals, governments, dispersed ownership of financial institutions, companies with dispersed ownership and other five categories; Liu Shao-kai, SUN Pei Nai full (2003) is divided into the ultimate controlling shareholder of state and non-state-owned . In this paper, the ultimate controlling shareholder of state control, private control, universities, collective enterprises, foreign, social groups and other seven categories. Among them, the state-controlled people are at all levels of state-owned assets management committee and government departments at all levels; private control means a natural person or family.
(B) the level characteristic
The level is the control chain between the ultimate controlling shareholders of listed companies included in the holding level, must meet the conditions of 2. Pyramids level to achieve the longitudinal extension of the ownership structure, the level is an important feature different from single shareholding pattern. The level also has an important role in the transmission mechanism of power and interests. Typically, the more the level, the higher the hidden nature of the ultimate controlling shareholder of listed companies control group structure may be more complex, transfer of benefits behavior may occur more likely to be found (Lang et al, 2003).
(C) the ultimate cash flow rights
Cash flow rights is the owner of the shares held by the representative of the usufruct. The pyramids, the ultimate controlling shareholder as the ultimate owner has the ultimate cash flow rights of the listed company, in accordance with the ultimate proportion of cash flow rights for residual income is the core and essence of ultimate ownership, but also the ultimate controlling shareholders' interests. Lucian Bebchuk (1999) method of calculating the ultimate cash flow rights equal to the level in the control chain and the product of the proportion of cash flow rights, and the ultimate control rights of the ultimate controlling shareholder of listed companies equal to the cash flow of all levels in the chain of control the minimum value of the right proportion.
(D) the separation of control rights and cash flow rights
Control rights and cash flow rights should be in accordance with the principle of one share one vote, one-to-one correspondence. But the ultimate controlling shareholder with the pyramids, to obtain greater control over a small amount of cash flow rights, a departure from the one-share-one-vote principle. In theory, as long as the level is large enough, the ultimate controlling shareholder in order to be able to control the bottom of the listed companies, listed companies have the ultimate cash flow rights ratio can be reduced to a small enough, and the separation of control rights and cash flow rights also bigger. Claessen et al (2000) using the ratio of control rights and cash flow rights measure the degree of separation of the two.

Third, China's listed companies pyramids structural characteristics of

(A) sample selection and data sources
1 sample selection
Listed companies since 2002 in its annual report disclosure control relationship between the controlling shareholder and actual controller, the basis of the calculated level, holding chart since 2004 began disclosed, the paper selects 2004-2005 Shanghai and Shenzhen listed on the Main Board as the primary sample, perform the following screening procedures: (1) excluding universities, collective enterprises, foreign, social organizations and other controlled listed companies. A smaller proportion of such companies, state-owned and private control of the control of listed companies as the research object. (2) Excluding B shares or H shares listed companies. These companies face the dual supervision of the inside and outside, to control the impact of capital market system environment differences, it is removed. (3) Due to the special nature of the financial statements and regulatory financial listed companies were excluded. (4) unknown removed using single shareholding pattern, cross-shareholdings, and the ultimate controlling shareholder of the Company. Performing the above procedures, a total of 1779 samples.
2 Data source
In the country Tyan (CSMAR), the actual control of listed companies in China 2004-2005 data based on the company's annual report the the inspection www.cninfo.com.cn.on and financial website, access to listed companies website and the official website and other channels manually collect information on the type and level of the ultimate controlling shareholder of listed companies, the ultimate cash flow rights, separation index calculated data calculated in accordance with Table 1.

(B) state-owned companies and private companies pyramids structural characteristics of three
Overall mean comparison
According to the data in Table 2, the separation index of state-owned companies in the median and mode 1, further study found that separation index of 993 state-owned companies, accounting for 72%, the remaining 380 state-owned companies separation index greater than 1, accounting for 28%. This shows that 72% of state-owned companies with the pyramids, but the control rights and cash flow rights are not separated. Ye Yong Hu (2005) also found a similar phenomenon, but did not make a further study. In view of this, all the sample companies into private companies, the separation index = 1 state-owned companies and separation index> 1 state-owned companies three groups were compared.
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