Current research confirms the existenceof ultimate controller in the listed private companies,and the ultimate controller can make good use of thecovert channel to get access to private benefits. First ofall, this paper analyses the controllers' motive andreason to expropriate minority shareholders from theperspective of deviated control right and cash flowright . Then, based on the separation of control rightsand cash flow rights, we establish the dynamic revenuemodel, and use mathematical method to deduce thehypothesis. Finally, this paper verifies the relationshipbetween the control rights, cash flow rights andentrenchment effect with the data from 2007 to 2009The results show that the related party transaction is animportant way of expropriation behavior, and theseparation between the two rights is convenient to dothat. What's more, the control rights have strongentrenchment effect, on the contrary the cash flowrights reflect propping effect. And the motive to gainprivate benefits increases with the separation degree ofthe two rights.
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