||Agency theory is based on highly dispersed ownership which generates the separation of ownership and management. Recent studies have found that the shareholding structure of enterprise does not significantly dispersion, but the phenomenon of Taiwanese enterprise controlled by family is significant. Controlling shareholders enhance their control right by pyramid structure and cross-holding, leading the separation of cash flow right and control right which is a new type of agency problems(controlling shareholders seize small shareholders' benefit; which is called the central agency problems). Most of past researches were aimed to find out the relationship between ownership structure and enterprise performance, therefore, this research will examine the conditions how enterprise choose its ownership structure.
This study intends to find out the enterprises’ tendency to choose pyramid, cross-holding or both. We use Taiwanese listed enterprise except financial industry as our subject, and gather information from 2006 to 2012, and use variables like degree of diversification, family enterprise, enterprise size, investors' protection, and enterprise performance to analyze enterprises' tendency to choose pyramid, cross-holding or both. According to the analysis, we get the result as follows:
(1)The higher degree of diversification, the bigger the enterprises' size, the more the number of directors, and the higher the proportion of domestic institutional investors', leading the enterprise tend to choose one of three types. (2) Enterprise tend to choose cross-holding if it is controlled by family. (3) When the information transparency is low, enterprise is less likely to choose pyramid in order to prevent controlling shareholders seize profits. (4) The better the performance, the more tendency to choose cross-holding. (5) The higher proportion of insider's ownership, the more tendency to choose pyramid, and less tendency to choose cross-holding and both. (6) The higher proportion of foreign institutional investors' ownership, the more tendency to choose both.