This paper focuses on the reasons for the separation of cash flow and control rights. We investigate whether private benefit hypothesis and risk aversion hypothesis can explain why firms with superior mechanisms for alleviating the agency problem have high cash flow right leverage. Our sample consists of Taiwan-listed firms over the period 2003-2007. We find that mechanisms for alleviating the agency problem, including debt ratio, board size, independent directors and supervisors, and institutional ownership, effectively reduce cash flow right leverage. When firms have superior mechanisms for alleviating the agency problem, controlling shareholders would not increase cash flow right leverage due to risk aversion. However, private benefit hypothesis can explain why firms with superior mechanisms for alleviating the agency problem still have high cash flow right leverage.