Empirical research on the listed companies´ excessive equity financing based on pyramid structure

Using the data of listed companies which got equity refinancing in China´s A-share stock market during the period of 2002-2005, this paper undertakes an exploratory study on excessive equity financing behaviors of listed companies from the perspective of ultimate controller´s benefit invasion towards minority shareholders. The results show that, firstly, the deviation of ultimate control rights and cash flow rights under the pyramid structure is the root cause for benefit invasion: the greater the deviation is, the greater the degree of excessive equity financing will be. Secondly, the complexity of pyramid structure has certain impacts on the degree of excessive equity financing. Finally, the property nature of ultimate controllers has a significant impact on the degree of excessive equity financing. When the ultimate controllers´ property is nonstate-owned, the degree of excessive equity financing will be greater than when it´s state-owned.