Private Benefits of Control,Growth Opportunities and Investor Protection

• 作者: Jiaxing You Min Xiao
• 来源期刊: 中国会计学刊：英文版
• 学科: 经济
• 关键词: PRIVATE BENEFITS of CONTROL GROWTH OPPORTUNITIES I
• 年，卷（期）: 2009,（1）
• 页码范围: 123-145
• 页数: 23页
• 分类号: F276.6

摘要

We develop a model to illustrate that controlling shareholders choose the level of investor protection that maximizes their own interests. Controlling shareholders in companies with complicated control structures can easily extract private benefits and are thus reluctant to enhance investor protection which would necessitate increased transparency. In contrast, controlling shareholders in companies with valuable growth opportunities are willing to improve investor protection so that they can benefit from the increased value resulting from the lower cost of capital. We test this prediction using firm-level data in China. The results show that the level of investor protection increases with decreases in control structure opacity and increases in growth opportunities. The correlation is more significant for enforcement than for the mechanisms of investor protection.