Gaining effective control of a corporation enables the controlling owner to determine how profits are shared among shareholders. Although the minority shareholders are entitled to the cash flow rights corresponding to their share investments, they face the uncertainty that the entrenched controlling owner may opportunistically deprive them of their rights. The effects of entrenchment by the controlling shareholder include outright expropriation, ., the controlling shareholder benefits from self-dealing transactions in which profits are transferred to other companies he/she The controlling shareholder can also exercise de facto expropriation through the pursuit of objectives that are not profit-maximizing in return for personal utilities. The entrenchment problem created by the controlling.
