The control of ultimate shareholder distorts corporate governance structure because the benefits of small and middle shareholders are more easily violated by ultimate shareholder. Based on enterp rise ownership ’s perspective, this paper analyzes the problem in controlling shareholder of China’s listed companies, makes researches on the formation and imp lementation mechanism of ultimate shareholder, app lies the multip le control chain to exp lain the ways of ultimate shareholder separating the ownership and the cash flows, and then finds that the governance efficiency can not attain the Pareto op timum where the ultimate shareholder exists regardless of ownership structure because the benefits of small shareholder is violated by ultimate shareholder.