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This paper aims to investigate the impact of the separation between control and cash flow rights (control-ownership disparity) on the earnings management practices of Chinese firms. The notable features of Chinese firms are those of concentrated ownership and the severe disparity that exists between the control and cash flow rights of controlling shareholders.

This study measures the level of Chinese firms’ earnings management by adopting two different methods of measurement: accrual-based earnings management (AEM) and real activity earnings management (REM). The authors also consider the possible trade-off effects between these two types of measurements. The data set in this study encompasses over 2,000 Chinese firms, using data from 2003 to 2015.

The results indicate that controlling shareholders are more likely to engage in AEM as their cash flow rights are more concentrated, while they are less likely to use REM as the disparity of control-cash flow rights increases. Further, this inverse relationship between REM and control-cash flow rights disparity becomes more pronounced in the case of a low cash flow rights group. As REM generally causes distortions in firms’ operations, it is possible that the controlling shareholders are more likely to constrain the use of REM as the disparity is perceived to grow. This result may indicate a reduced agency problem between controlling and minority shareholders due to the developing and/or existing ownership dispersions, which are mainly driven by recent reforms applied to Chinese capital markets. However, we do not entirely exclude the possibility of other types of expropriations by the controlling shareholders. It appears that the controlling shareholders are still able to exert a significant level of control, even following a substantial ownership dispersion, and they may seek alternative expropriation methods, including but not limited to intercorporate loan or related party transactions as the disparity of control-cash flow rights increases.

Although the Chinese economy is experiencing a series of reforms to infuse market forces into capital markets, little has been known about the effects of ownership-control disparity in Chinese firms. Our findings highlight the importance of the country specific context in this vein of research.

The partial privatization of state-owned enterprises (SOEs) is a dynamic process. The main feature of this process lies in not only gradual and sequential privatizations but also privatized shares transfer. For partially privatized SOEs, the introduction of private sector ownership is not the end of the story because the previously introduced private owners may choose to leave the SOEs by transferring the privatized shares after privatization, a process that is called “privatized shares transfer”. This paper aims to investigate the determinants of privatized shares transfer (PST) from the perspective of large shareholders’ control rights.

Considering the pyramidal structure of Chinese listed companies, this paper extends existing analyses to study the impact of the ultimate controller’s control rights on privatized shares transfer. This paper also investigates the relationship between excessive control rights of the largest controlling shareholder and PST in view of the principle of equity of rights and obligations. In addition to a perspective on the holding of key positions by large shareholders, this paper further explores the impacts of the ownership of the largest controlling shareholder on privatized shares transfer.

The results capture the fact that the higher control rights of large shareholders lead to more privatized shares transfer. After exploring the impacts of excessive control rights, the results provide evidence supporting the idea that firms with excessive numbers of directors, senior managers or supervisors who also have positions in the largest controlling shareholder’s entity are more likely to transfer privatized shares owned by private owners. In addition, the largest shareholders’ ownership also plays a role in privatized shares transfer.

This evidence suggests that the large shareholders’ control rights should be limited to an appropriate range during the process of privatization, thereby giving private shareholders more opportunity to participate in the operation of firms, strengthen the state and enhance the competitiveness of state capital.

This study aims to examine the effect of the separation of control and ownership on the efficiency performance of Taiwanese electronics firms.

The paper employs data envelopment analysis to estimate efficiency performance. Following Kuan et al., the paper measures the severity of a firm's agency problems using the difference between voting rights and cash flow rights, and the difference between seat control rights and cash flow rights. Using a panel dataset for the period from 2004 to 2010, the paper runs OLS regressions to find the relationship between efficiency performance and the separation of control and ownership.

The results show that both the divergence between voting rights and cash flow rights, and the divergence between seat control rights and cash flow rights are significantly and negatively related to efficiency performance. Using Tobit regression in the second stage also provides a consistent result.

Shareholders, especially the minority group, should think twice before investing in a firm with a high deviation of control and ownership.

This is the first paper to examine the effect of the separation of control and ownership on the efficiency performance of Taiwanese electronics firms. The empirical evidence suggests existence of negative entrenchment effects in the electronics industry in Taiwan.

The purpose of this paper is to examine whether the type of ultimate controllers (i.e. private vs state) affects corporate disclosure quality and whether the relationship between the type of ultimate controllers and corporate disclosure quality is moderated by the separation of ownership and control.

This study employs the data of 405 Chinese listed firms in 2005. Annual reports were reviewed to collect the data including the type of ultimate owners, cash‐flow rights, and control rights; and the ratings of corporate disclosure quality were obtained from the Shenzhen Stock Exchange website. Ordered logistic regression tested the hypotheses.

It was found that corporate disclosure quality is lower for firms ultimately controlled by individuals than for firms ultimately controlled by the state. Also, the negative effect of private ultimate ownership on corporate disclosure quality is stronger for firms with high deviation of cash‐flow rights and control rights.

These findings suggest that privatizing state‐owned companies may increase the expropriation of minority shareholders by controlling shareholders if the privatization does not reduce the separation of cash‐flow rights from control rights. Thus, it may be necessary to strengthen the governance role of minority shareholders and constrain the divergence between cash‐flow rights and control rights of the ultimate owners when state‐owned companies are privatized.

This study contributes to the literature on the expropriation of minority shareholders by examining the main effect of the type of ultimate controllers and the interactive effect of ultimate ownership type and the divergence of ownership and control on corporate disclosure quality.

The purpose of this paper is to empirically test how ultimate controlling shareholders' ownership‐control rights divergence and government intervention affect choice of capital structure (CS), and how the relationship between controlling shareholders' ownership‐control rights divergence and choice of CS is affected by government intervention.

Integrating the institutional background of China, the paper adopts balanced panel data containing related continuously obtainable information of 1,076 non‐financial companies listed in Shanghai and Shenzhen from 2004 to 2008 (a total of 5,380 observed values), and applies a series of generalised least squares to empirically test how ultimate controlling shareholders' ownership‐control rights divergence and government intervention affect choice of CS, and how the relationship between controlling shareholders' ownership‐control rights divergence and choice of CS is affected by government intervention.

The empirical evidence provided by this paper indicates that: controlling shareholders' ownership‐control rights divergence is negatively correlated with leverage; government intervention is positively correlated with leverage; and government intervention will weaken the negative relationship between controlling shareholders' ownership‐control rights divergence and leverage, and make debt capital suppliers (especially financial institutions like banks, etc.) provide loans, especially long‐term ones, to companies with high ownership‐control rights divergence.

So far, it is still little‐known how ownership‐control rights divergence affects choice of CS and how government intervention affects the relationship between ownership and control rights divergence and choices of CS. This paper is the first to test how ultimate controlling shareholders' ownership‐control rights divergence and government intervention affect choice of CS, and how the relationship between controlling shareholders' ownership‐control rights divergence and choice of CS is affected by government intervention based on the institutional background of China.

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of industrial and economic democracy, which centres around the establishment of a new sector of employee‐controlled enterprises, is presented. The proposal would retain the mix‐ed economy, but transform it into a much better “mixture”, with increased employee‐power in all sectors. While there is much of enduring value in our liberal western way of life, gross inequalities of wealth and power persist in our society.

This paper aims to explore the influence of founder shareholders’ resources on the allocation of control rights from the perspective of incomplete contract theory and resource-based theory.

This paper analyzes newspaper materials with NVivo11on a case of battle for corporate control in Chinese top-listed company-Vanke Group.

The research shows that human capital is the key resource and the holding proportion of financial resources directly affects the allocation of control rights. At the same time, social capital is unstable and easily broken. At last, institutional environment also affects the degree between the relationship of founder shareholders’ resources and the allocation of control rights. The influence of founder-shareholder resources on the allocation of control rights follows the path of “crisis – founder-shareholder’s resources – founder’s ability - allocation of control rights.”

This study only selects the financial capital, human capital and social capital of Shi Wang, the founder of Vanke, as the analysis object. The study can expand the types of founder shareholder resources to verify and enrich the conclusions.

The current theoretical research in the literature focuses on the necessity of equity and shareholder’s resources versus the control rights. Some key factors and mechanism on the relationship have not been fully clarified. The results of this paper not only extend the combination research of social network and corporate governance, but also provide enterprise founders with references for making reasonable decisions during control battle.

The aim of this paper is to revisit the board independence–audit fees (BI–AF) relationship while taking into account the ownership structure of the firm. Two effects are unfolding along the ownership concentration spectrum: separation of ownership and control (principal–agent problems) and separation of voting and cash flow rights (principal–principal problems).

The study is conducted over a seven-year period (2002-2008) using panel regressions on a sample of Canadian publicly traded companies. The authors use a moderated regression analysis incorporating two-way interactive terms (ownership × BI) and a sub-group analysis.

The results show a positive and significant relationship between BI and AF when ownership is concentrated in the hands of a dominant/controlling shareholder. The higher the gap between voting and cash flow rights of the ultimate owner, the stronger the relationship between BI and AF. Overall, evidence supports both the demand-based perspective on AF and the expropriation effect argument.

Results support a one-size-fits-all approach to governance despite growing concerns from academics and interest groups about the appropriateness of pursuing such strategy when ownership is concentrated in the hands of a dominant/controlling shareholder.

By taking the excess voting rights into account (difference between voting rights and cash-flow rights of the ultimate owner), the authors propose a refined classification of the sample firms along the ownership concentration spectrum.

This paper aims to examine the internal logical relationship between two intergenerational inheritance ways of passing property rights and residual control rights (RCR) and to construct a conceptual model comprising transfer elements, paths and timing of succession in this process.

Driven by the cases of Haixin, Tianyijiao and Changhe Group, this paper applies research methods of copying and expanding analysis logic, progressive deduction, content analysis and comparative research based on the perspective of HeXie theory to explore the deep interrelation of transfer elements, paths and timing during family business succession.

The findings present that the content of intergenerational inheritance of a family firm is the inheritance of property rights and RCR. First, the inheritance of property rights is a static inheritance of time-point delivery, whereas the inheritance of RCR is a dynamic inheritance process for a period of time. Second, the inheritance of property rights and RCR are not independent; only a “HeXie” succession of both rights can realize a successful inheritance of family firms.

This paper constructs the paths and timing model of intergenerational inheritance of property rights and RCR in family firms. This paper integrates the current literature studies on the family inheritance of property rights and RCR and explains their internal mechanisms. This paper also provides a theoretical foundation and empirical evidence for family business transitions in the business world.

The purpose of this paper is to illustrate and examine the effects of ultimate ownership, institutionality and their interactions on capital structure in a unified framework, based on evidence from China.

Using six years of panel data of Chinese non-financial listed firms between 2004 and 2009, this paper estimates with correlation analysis and multiple regression analysis.

This paper finds that debt financing facilitates the ultimate owner's expropriation behavior. The separation of control rights and cash flow rights is positively related to capital structure, while cash flow rights negatively affect it. Compared with private ultimate owners, state ultimate owners have less incentive to reap the benefits of expropriation, implying that the separation of control rights and cash flow rights has a smaller effect on the capital structure of state-owned firms. The improvement of institutionality can restrain ultimate owners' expropriation behavior, and regional institutional development is negatively related to capital structure. The separation of control rights and cash flow rights has a smaller positive effect on capital structure in regions with better-developed institutionality.

This paper incorporates ultimate ownership and institutionality into a unified analytical framework of capital structure. It not only enriches related studies on capital structure, but also helps us understand the institutional roots of irrational capital structure behaviors in China. This paper also provides further evidence on ultimate owners' expropriation of minority shareholders through debt financing.