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Ownership structure, corporate governance and Performance Research

Author: JinYing From: www.yourpaper.net Posted: 2009-04-03 01:22:44 Read:
[Abstract] domestic and foreign scholars around the shareholding structure in corporate governance, and thus the impact on corporate performance. The research is focused on ownership concentration, insider ownership and equity identity of the holder structure. This paper were reviewed and a brief review and propose some research proposals.


Separation of the modern corporate ownership and control the basic principal-agent problem. Which inspired great interest to scholars for the different corporate governance mechanisms, how to solve the principal-agent problem. In many studies, the ownership structure is considered to be an important mechanism of corporate governance, and have an important impact on corporate performance. Research shareholding structure in corporate governance since Jensen and Meckling (1976). Since then, foreign scholars around the shareholding structure in corporate governance and thus the impact of extensive and in-depth research on corporate performance, but a lot of research is based on the United States as the background, and are mainly concentrated in the ownership concentration and insider holdings two aspects. In recent years, Chinese scholars shareholding structure in corporate governance and its effect on the performance of listed companies in China has been extensively studied, and made some research.

Second, the ownership concentration of Theoretical and Empirical Study

(A) the role of ownership concentration in corporate governance
Stiglitz (1985), Shleifer and Vishny (1986) believes that outside shareholders have important economic interests in the enterprise, the incentive to effectively influence and supervision of managers to ensure that managers do not engage in activities detrimental to shareholder wealth. Therefore, the increase in the proportion of the external large shareholders will reduce the agency conflicts. Pound (1988) argue that large shareholders may be negative voters, with internal complicity and contrary to the best interests of dispersed shareholders. Thus compete with the aforementioned regulatory assumptions occupation of assumptions. In the case of a lack of external oversight, or diversified type of outside shareholders, the controlling shareholder may at the expense of the interests of the other shareholders to pursue their own interests, its variety of means, such as securities repurchase, transfer of assets, the use of transfer pricing insider trading and so on.

(B) Ownership Concentration and Corporate Performance
Ownership concentration and corporate performance is positively correlated
Berle and Means (1932) believes that there is a positive linear relationship between ownership concentration and corporate performance, because dispersed ownership leads to the "free-rider" problem, resulting in difficulties in monitoring managers, and the option for a certain degree of concentration conducive to encouraging the implementation of the supervision of the external shareholders and manager. Hill and Snell (1989) to measure productivity performance, to prove the existence of such a positive contact U.S. companies. Xiaonian and Wang Yan (1998) use the the 1993-1995 listed company data empirical research results show that the ownership concentration and enterprise market capitalization - book value ratio has a significant positive correlation, but the margin is relatively weak. Zhang Hongjun (2000) 1998 385 listed companies in China that ownership concentration (top five shareholders stake) There was a significant positive correlation between Tobin's Q.
Ownership concentration and corporate performance was negatively correlated
Fuerst and Kang as a sample of the 947 companies listed and traded in the United States, 1992-1993 (1998) study found that companies with controlling shareholders (% 50%), the shareholding ratio of the market value has a negative related effects.
3 non-linear relationship between ownership concentration and corporate performance
Gedajlovic and Shapiro (1998) confirmed that the enterprise in the United States and Germany, a non-linear relationship between ownership concentration and profitability. Yongxiang and Zu-Hui Huang (1999) 503 A share companies listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange before the end of 1998 as a sample of studies have shown that, with the increase in the proportion of the largest shareholder of the company, Tobin's Q value first, to to about 50%, the ratio Q value starts to decrease. They further believe that a certain degree of concentration, the relative controlling shareholder and other large shareholders equity structure conducive to business incentives in general, mergers and acquisitions, proxy contest to play the role of oversight mechanisms.
Ownership concentration and corporate performance basically irrelevant. Gao Hua (2001) 1999 473 listed companies as samples, ownership concentration index (the largest shareholder, the top three shareholders and the top five shareholder equity ratio) and the relationship between ROE and EPS analysis The results show that ownership concentration and corporate performance is basically irrelevant.

Third, the insider ownership Theoretical and Empirical Study

(A) insider ownership role in corporate governance
Jensen and Meckling (1976) between the interests of managers and outside shareholders convergence hypothesis. The natural tendency of managers is based on the best interests of their own to allocate the resources of the enterprise, which may conflict with the interests of outside shareholders. But when managers in the greater interests of enterprises, the more he may be motivated to make it the interests of the remaining shareholders with the interests of coherence (such as departure from the reduction of the value-maximizing behavior). Therefore, when the increase in the proportion of managerial ownership, managers and outside shareholders' interests may converge, so that the conflict may be resolved between them. Fama and Jensen (1983) argues that when managers have a significant proportion of the company's stock, giving him enough of the voting power and influence, he can meet his non-value maximization without risking their jobs and rewards , these arguments led to managers Entrenchment assumptions. Based on the assumption of excessive internal options has a considerable negative impact on corporate performance.

(B) insider ownership and corporate performance
Insider ownership and corporate performance is positively correlated. Guo-Liang Liu and Wang Jiasheng (2000) managers stake, the proportion of the ESOP as the explanatory variable, the correlation between insider ownership and corporate performance (ROA, ROE, EPS) empirical test results show that the internal Ownership and Corporate Performance positive correlation.
2. Linear relationship exists between insider holdings and corporate performance. Wruck (1989), when the proportion of shares held by the managers of enterprises between 5% -25%, U.S. corporate managers exist Entrenchment phenomenon.
Insider ownership and corporate performance is basically irrelevant. Zengquan Li (2000) as a study sample of 799 listed companies in China, and the overall sample based on the size of the total assets of the industry, the proportion of state-owned shares and regional grouping in proportion to the holdings of the managers on firm performance (ROE). The empirical results show that, between the proportion of insider ownership and corporate performance is not significantly correlated.

Fourth, the equity holders of identity structure theory and empirical research

(A) the role and efficiency of state-owned shares in corporate governance
The role of state-owned shares in corporate governance
Domestic and foreign scholars are mainly two theoretical assumptions: the grabbing hand or a helping hand.
Grab the hands of state-owned shares have a negative effect on corporate governance. The arguments of scholars at home and abroad: (1) In addition to the economic objectives, as the government of the state-owned shareholders as well as political objectives, and thus the state-owned shares will lead to serious government administrative intervention, distort resource utilization optimization configuration for (Shleifer and Vishny, 1994 ).
(2) state-owned shares can easily lead to internal control of listed companies. HE Chun (1998) argue that the greater the proportion of state-owned shares (including state-owned shares and state-owned legal person shares) in the company, the company's internal control, the stronger.
(3) The Government has executive powers, the rules of the market makers and defenders, as a shareholder in the market, both when the "referee", "players" will lead to the abuse of power, undermined the market rules.
The helping hand that the state-owned equity can help a business enterprise development, that is state-owned shares has a positive effect on corporate governance. The arguments of scholars at home and abroad have:
(1) government in the mixed ownership companies as revenue collection, plays the role of shareholders, to oversee the company management, to prevent the internal control phenomenon (David, 1998). Therefore, the government oversight of state-owned shares, is imperfect in the corporate governance structure, the second best option in case of lack of effective external monitoring mechanism for managers.
(2) the introduction of state-owned shareholders to protect the company from the government of any malicious attacks.
(3) a higher proportion of state-owned shares means for the Government to protect and enjoy the possibility of rising tax incentives (Chen Xiaoyue, Xu Xiaodong, 2001).
2. State-owned shares and corporate performance
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