Notice of RetractionThe excess control of ultimate controlling shareholders and corporation investment: Empirical evidence from Chinese capital market

Notice of Retraction

After careful and considered review of the content of this paper by a duly constituted expert committee, this paper has been found to be in violation of IEEE´s Publication Principles.

We hereby retract the content of this paper. Reasonable effort should be made to remove all past references to this paper.

The presenting author of this paper has the option to appeal this decision by contacting TPII@ieee.org.

By taking the data on China´s listed companies from 2002 to 2006, this paper investigate the effect of ultimate controlling shareholders on investment decision. The results show that, as for ultimate controlling shareholders of private firms, the higher the divergence between the cash-flow rights and the control rights is, the more serious is the underinvestment because of tunneling activities. The negative effects of agent problem on investment inefficiency are mainly in firms of the lower cash-flow rights. Furthermore, the results show that the high preference of cash holdings may be the mechanism resulting in underinvestment for ultimate controlling shareholders. However, all these conclusions may fail to explain some phenomena in the state-owned firms. This research gives a useful reference to understanding the disputation of privatization to improve efficiency from the view of investment. What is more, it also gives further complement to the theory of investment in developing countries.