| Summary: | 碩士 === 中原大學 === 會計研究所 === 90 === Abstract
Since the Asian financial crisis in 1997, several researches for the East Asian have found that concentration of ownership higher than other areas and weak corporate governance have been important reasons of financing crisis. Therefore, the study adopts the method developed by La Porta, Lopez-de-Silanes and Shleifer (1999), which traces the chain of ownership to find who has the most voting rights, identifies their ultimate control patterns, finds the controlling shareholders of firm, and then calculates each ultimate owner’s control rights and cash flow rights.
In Addition, we regress to the market-to-book ratio of common equity on controlling shareholders’ control rights deviating from cash flow rights, then examine the evidence on expropriation of minority shareholders. Furthermore, considering the quality of board oversight has received increasing attention in recent years. This paper investigates whether the board construction on corporate governance mechanism effectively discharge its monitoring function and mitigate central agency problem.
Finally, the study tests whether it is appropriate to treat ownership structure as exogenous, and explores the function of managerial compensation contracting on equity’s agency problem.
The research data are collected from the publications of those companies that stocks are openly traded on the Taiwan Stock Market between 1998 and 2000.There are 163 validated observations which are obtained. Empirical result suggests：
1.The high concentration of ownership is more common in Taiwan publicly listed companies and those firms are typically controlled by families.
2.The controlling shareholders typically have power over firms significantly in excess of their cash flow rights because they through the use of pyramids, cross-holdings, paper company and participation in management. And the condition of family control company is the worst.
3.The more the controlling shareholders’ control rights deviate from cash flow rights, the worsen the central agency problem is between controlling shareholders and minority shareholders, and the extent of expropriation is particularly serious among family-controlled samples.
4.For Taiwan publicly listed companies, the corporate governance mechanism could not effectively discharge its monitoring function and mitigate central agency problem.
5.The results of simultaneous equation regression show that controlling shareholders’ control rights is an important determinant of corporate value and investment. More importantly, the regressions also show that corporate value is an important function of controlling shareholders’ control rights and investment.
Key Words：Central agency problem, Corporate governance, Pyramid structure, Cross-holding, Shareholder value.
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