1, Harris-Levitt model
This is one of the earliest theoretical models to study how the capital structure affects the distribution of corporate control rights. This model studies the relationship between managers' control of voting rights, debt-equity ratio and M&A market, and holds that the current managers of the company can increase their voting rights by increasing their shareholding ratio, thus enhancing their control ability over the M&A plan of the company. Therefore, it is assumed that managers can obtain equity income through their shares and private income through their control rights.
Under this assumption, the value of the company depends on the competition in the M&A market because the current manager and his competitors have different abilities to run the enterprise, and this competition is affected by the shareholding ratio of the current manager. Therefore, there is a trade-off problem: on the one hand, with the increase of the shareholding ratio of the current manager, the possibility of the current manager mastering the control of the company increases, thus increasing its income; On the other hand, if the current manager's shareholding ratio is too high, both the enterprise value and the manager's shareholding value will be reduced, because the potential competitors with stronger ability have less chances of success, which may cause the company's vitality to shrink. The optimal shareholding ratio of current managers is the result of weighing the private benefits brought by their control rights (or the loss of interests after losing control rights) and the loss of value of their shares (or the increase of bankruptcy possibility). The result of this trade-off can actually be achieved by choosing the optimal debt level. It can be seen that the choice of capital structure will not only affect the shareholding ratio and control right of operators, but also affect the competition in the M&A market [3].
2.Stalz model
It is very similar to the Harris-Levi model mentioned above, and also pays attention to the relationship between managers' control rights and corporate mergers and acquisitions. But there are also differences between them, mainly in the objective function: Harris-Revivo model determines the optimal control structure with the goal of maximizing the expected utility of managers, and Stalz model determines the optimal control structure with the goal of maximizing the expected income of investors [4].
3. Ahon-Bolton model
Although the above two models both discuss the relationship between the choice of capital structure and the arrangement of corporate control, they both ignore the important fact that different corporate control arrangements are actually different contractual arrangements. Therefore, when studying the relationship between the choice of capital structure and the arrangement of corporate control, we should consider the contractual nature of corporate control.
Ahon-Bolton model has taken a step in this direction. Ahon-Bolton model uses incomplete contract theory to study the optimal control arrangement between managers (only technology without capital) and investors (only capital without technology). This model assumes that a company can get a verifiable monetary income Y that can be clearly stipulated in the contract, but managers can get an unverifiable and untransferable private income T, which leads to the conflict of interest between investors who simply pursue monetary income and managers who pursue both monetary income and private income. In order to restrain this conflict of interests and maximize the total income (y+t), the optimal control structure should be as follows: if the monetary income (or managers' private income) and the total income increase monotonously, then the unilateral control of investors (or managers) can achieve the optimal social efficiency; If there is no monotonic increasing relationship between monetary income or private income and total income, then the camera transfer of control rights will be optimal, that is, when the company is in good operating condition, managers will gain control rights, on the contrary, investors will gain control rights. Among them, the idea of "camera transfer control" is the core of the model, which pays attention to the role of bankruptcy mechanism in debt contract [5].
4.Hart model
Although Ahon-Bolton model captures the key aspect of the optimal arrangement of control rights-"camera transfer of control rights", this transfer of control rights is random, or based on a verifiable reality (such as income and profit level), rather than on the inability to repay the principal and interest of debts. Hart model not only absorbs the creative idea of "camera transfer control" of Ahon-Bolton model, but also further improves and develops Ahon-Bolton model.
Under the condition of incomplete contract, Hart model introduces the contradiction of "going concern and liquidation of the company", studies the optimal financing contract and the corresponding optimal control structure, and draws three important conclusions: first, if the financing method is to issue voting common shares, the shareholders hold control rights; Second, if the financing method is to issue non-voting preferred shares, managers will have control; Third, if the financing method is to issue bonds and borrow money from banks, the control right is still in the hands of managers, but the premise is to repay the principal and interest of debts on time, otherwise (bankruptcy), the control right will be transferred to creditors. In addition, the model also notes that short-term debt can control managers' moral hazard, while long-term debt (or equity) can support the expansion of the company, so it is considered that the optimal capital structure should be weighed between the two [6] (P322-370).
5. Laarif Mann model.
The above model basically studies the influence of two basic financing instruments (bonds/stocks) on the arrangement of corporate control rights, but fails to explain the influence of specific forms of various financing instruments (such as convertible bonds, stocks preempting bonds, etc.). ) On corporate control. Laarif Mann model is discussed in this respect.
By comparing and analyzing the mixed ownership of convertible bonds and standard debts, Laarif-Mann model holds that when it is impossible for a venture capitalist to renegotiate the transfer of control under the condition of issuing convertible bonds, he is most motivated to improve his efforts, because doing so can not only increase his payment, but also improve his possibility of exercising convertible rights. In other words, designing a suitable convertible bond can make entrepreneurs work harder and choose the right behavior under mixed ownership. Therefore, in the changeable economic environment of capital market, choosing corporate bonds with options, such as convertible bonds, has great influence on effectively arranging corporate control rights and improving principal-agent relationship.
It should be pointed out that economists and financial theory experts not only put forward the above theoretical models, but also use a large number of empirical data to demonstrate these theoretical models.