Separation of control and cash flow rights, ultimate controlling shareholders’ equity pledge ratio and risk of control transfer--evidence from Chinese A-share listed companies

Liang Wang and Wenyan Cao

Applied Economics Letters, 2022, vol. 29, issue 16, 1533-1540

Abstract: Listed companies with a higher separation of two rights have less risk of control transfer of the ultimate controlling shareholder. The ultimate controlling shareholder’s equity pledge ratio plays a remarkable mediating role in this process. At different pledge rates, the ultimate controlling shareholder’s equity pledge exhibits an ‘encroachment’ or ‘incentive’ effect on corporate governance, respectively, resulting in an inverted U-shaped relationship between equity pledge rate and the risk of control transfer. Company size has a heterogeneous effect on the risk of control transfer, while shareholding concentration has heterogeneous and single threshold impacts on this risk.

Date: 2022
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DOI: 10.1080/13504851.2022.2097170

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