Study on Financing Constraints and Inefficient Investment of Ultimate Owner in Private Pyramid Firms

摘要

Based on the theoretic analysis of inefficient investment of ultimate owner, the paper analyzes the problem of inefficient investment of ultimate owner in private firms using unbalanced panel data of Chinese private listed firms. The result suggests that ultimate owner will make under-investment facing financing constraints, and he will do over-investment without financing constraints. The smaller of the cash-flow rights owned by ultimate owner or the worse protection of investors, the more severely over-investment will be undertaken by ultimate owner. Besides, the paper investigates the relationship between the tunneling and over-investment of ultimate owner and finds the positive correlation without financial constraints.