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Ownership structure and control characteristics of Private Listed Companies in China

Author: ZhangTianYang¡¡QiaoYinJiu From: www.yourpaper.net Posted: 2009-04-05 21:38:18 Read:
[Abstract] in the context of "Guotuiminjin" become the focus of economic reform, China's private listed company ownership structure and control qualitative description and quantitative analysis in order for our country to develop policies and enterprise investment decision-making has been benefit.

From the point of view of private listed company's ownership structure and control, ultimate control of the use of the pyramid structure control mode, "small group of large," control "architecture, the controlling shareholder of the violations of minority shareholders "spillover effect." The degree of separation of ownership of private listed companies in China greatly, resulting in a more serious central agency problem.

, The shareholding structure of the main features of China's private listed companies

Of private listed companies ultimately controlled use of the pyramid (Pyramid Structure) control mode. Correspondingly, its ownership structure has the following salient features.

(A) control of the controlling shareholder entitled to the ownership of cash flow (Cash-Flow-Rights) altitude deviation
The control corresponding pyramid of private listed company's ownership structure is usually controlling minority shareholding structure of (Controlling Minority Structure). This shareholding structure is different from the dispersed ownership structure (Dispersed ownership) and major shareholders control structure (controlled structure). Such ownership structure layers zoom ultimate control of control of the business to achieve over control of the enterprise, the ultimate control requires less investment will be able to grasp the larger voting rights, control and ownership separation. In-depth analysis of the situation of the separation of ownership and private listed companies in China, following the author private listed companies in Shanghai as a case study.

Can be found in Table 1, 213 private listed companies in the Shanghai Stock Exchange, the ultimate control of the enterprise investment of only 22.42%, and have control over an average of 34.32%, the absolute deviation degree of ownership and control that is ultimately controlled people ownership and control of the deviation of 11.90%, the the relative deviate from an average of 63%. Quantitative analysis above, the higher the degree of deviation of China's private listed companies on the ownership and control, with the ultimate control people into the company's funds amounted to approximately 63% of its control over ownership of significantly less than control of the business. In this case, the ultimate control of the people's interests and the interests of minority shareholders is inconsistent, violations have greater "spillover effect", causing a larger agency costs. Thus, the ultimate control of moral hazard and adverse selection corresponding high motivation to strengthen the the hollowed motivation of minority shareholders against the company.

(B) family controlling shareholder of portfolio concentration, the low rate of small shareholders, external equity scattered
Family concentrated ownership is a common phenomenon worldwide, in Europe, the proportion of family-controlled listed companies is 50%, while in the East Asian countries and regions, the majority of corporate control in the hands of the family. The exception of Japan, Southeast Asia and other countries and regions, an average of more than 52% of the business is controlled by the family, in accordance with the classification level of 10%, the highest proportion of family-controlled are Indonesia (68.60%), South Korea (67.90%); Taiwan and Hong Kong, China, the proportion of family control is also high, 65.60% and 64.70% of the company's control; the Singapore family control ratio of 52.0%. (Tangzong Ming, Jiang bit. Shareholders: Listed Companies in China empirical research [M]. Shanghai: Shanghai Jiaotong University Press ,2005:84-85) Similarly, the family-controlled phenomenon of private listed companies in China also more common, according to Chinese private Corporate Research Group research data shows that the opening of new private enterprises in the country, the owner, investment accounted for 82.7% of the total investment, while all other investors, 13.10% of the relatives of the owners. (Li Ya property rights of private enterprise integration [M] Beijing: Economic Science Press ,2005:46 of-47) In addition, according to statistics, China's SME board listed companies, private enterprises, family businesses account for more than 80%. For example, Xin Fu biochemical family holds 49.93%, 56.60% the McNair shares in family ownership, the Zhejiang Communication family ownership of 52.50%. (Li Ronghua improve the analysis of China's private listed companies and corporate governance [J]. Jinling University, 2005 (9) :20-23) In order to better illustrate the degree of control of the family, the controlling shareholder of listed companies, the author further The 213 private listed companies in the Shanghai Stock Exchange, the ultimate controller of the control of listed companies. According to the data in Table 2 show that in the private listed companies in Shanghai, the largest shareholding ratio is more than 50% of the 18.22% of the total companies, absolute control; second largest shareholder stake of less than 5% Company 27.10%; second largest shareholder equity ratio of less than 10% share of the total number of companies in the proportion of 50.93%. The above data show that the family shareholders of private listed companies control the shares of listed companies, the strong control of the family-controlled private listed companies, less the shares held by minority shareholders, the proportion of low, it is difficult to form a balanced shareholding structure , the interests of minority shareholders vulnerable.


Second, China's private listed companies control features

Ultimate control of China's private listed companies is usually a pyramid structure to maintain control of listed companies, the ultimate controller of the pyramid the top of the tower, a listed company in the bottom of the column, the control structure has the following main features:

(A) control mode mostly pyramid structure to control the chain is longer, the ultimate controller "in small dial control structure is more complex
Ultimate control of China's private listed companies are generally achieved through pyramid structure of control of listed companies, the controlling shareholder is the top level of the pyramid, a listed company is placed in the pyramid tower and zoom control over the company through a series of intermediate-level layers the controlling shareholder will be able to control the underlying listed companies with less investment, and control the number of layers increases, the longer the control chain, with respect to the control of the smaller, the greater the degree of separation of ownership and ownership, controlling shareholder has control of the company "leverage effect". (Continued on page 55) (Continued from page 53) the author of the control structure of private listed companies in the Shanghai stock market to illustrate this problem. Data show that 113 private listed companies with single-layer pyramid structure; 57 two-story pyramid structure; 22 (and above) three-tier pyramid structure. In addition, with the lengthening of the control chain, and ultimately control the ownership of listed companies declining, have control over is rising. In three or more pyramid structure, and ultimately control the ownership of enterprises is only 15.26% to 37.57%, but have control over, control is 2.46 times that of ownership, the degree of separation of ownership and more serious. (Shanghai Securities Research Center of Chinese corporate governance report - private listed corporate governance (2005). [R]. Shanghai: Fudan University Press .2005:74-75) especially in the control of the pyramid structure, often nominal control inconsistent with the actual control, complex and hidden control structures result in ultimate control in the name of the actual ultimate control inconsistencies, so that the control structure more complex.

(B) the private enterprise system exacerbated the degree of separation of ownership and control, the control structure is more complex, the ultimate controller of the violations more covert
With the gradual relaxation of private enterprises listed on the issue and the transferee of the policy of the state-owned shares, the phenomenon of private listed companies structure enterprise system are emerging. On the surface, China's private enterprises made movement in order to seek diversified development, but a considerable part of private enterprises made the real motive is trying to take advantage of China's stock market system flaws and loopholes in the law, by making System movement emptied listed company, price manipulation and to grab excess profits purpose. Relative to the private listed companies in general, the private enterprise system by controlling the number of listed companies, the more severe the degree of separation of ownership and control, ownership structure more complex control chain longer. I 47 listed companies controlled by the Department to private enterprises in Shanghai Stock Exchange, Shanghai Stock Exchange 166 companies to control the single-listed companies as samples, comparative analysis of the ownership and control of the two groups of companies, the results of the analysis show that private enterprises The degree of separation of ownership and control of the Department of listed companies is significantly greater than the non-private enterprises are listed companies, control chain longer control more layers. Private enterprise system control of ownership, general control of private listed companies is only 1.45 times that of ownership, the average number of layers of private enterprises listed companies. 1.83 layer, rather than control the number of layers of the private enterprise system only 1.28 layer, showing that the private enterprise system allows private enterprises to small dial, can exercise control over the larger assets of listed companies with less investment.
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