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Shareholding structure of listed companies in China on company performance

Author: LiShengLin From: www.yourpaper.net Posted: 2009-04-25 11:34:05 Read:
[Abstract] This article from equity property, ownership concentration and other aspects for the status quo of the shareholding structure of listed companies in China and its impact on the Company's results of operations, in order to further promote the standardization of development and the perfection of the shareholding structure of listed companies in China.
[Key words] shareholding structure; listed companies; performance of the company

The ownership structure is an important part of the corporate governance structure, a reasonable shareholding structure of listed companies to improve the efficiency of governance and an important guarantee to achieve excellent results. Generally speaking, the proportion of the shares of the different nature of the shares of the company's total share capital and their relationship is the shareholding structure. It mainly includes: equity property, in accordance with the stock segments are state-owned shares, legal person shares, public shares or foreign shares; equity liquidity, mainly refers to the number of the shares issued by listed companies publicly tradable and can not the ratio between the number of publicly traded circulation; ownership concentration, that is demonstrated by the equity of all shareholders because of the different stake centralized or decentralized number of indicators. In view of China's stock market is the implementation of the size of non-lifting of the ban, the various properties of the stock will achieve full circulation, we analyze the performance of the company from two perspectives of the equity interest in the properties and ownership concentration.

Equity property on company performance

Equity property is the different nature of the shareholding structure, the shareholders of each of the different nature of the Group of the number of shares held. China's listed companies attribute complex
Miscellaneous, state-owned shares and legal person shares, outstanding shares, A shares, B shares, H shares the distinction of the different financial markets. This paper analyzes the different nature of the A-share market equity property on company performance.
(A) State-owned shares
Common to all state-owned shares as of all the people, commissioned by the National People's Government for management, and all levels of government commissioned a specialized asset management company or state-owned enterprises are managed, and finally the actual control of the state-owned assets, the right to operate the state-owned assets entrusted to direct operators, expression of the will of the commissioned at all levels, and can not impact the direct agency operators. Thus, the state shares in existence for the owner of the "absence", a lengthy principal-agent chain monitoring costs increased greatly. Dominated by state-owned shares of the corporate governance structure, on the one hand, there is no real owner, the formation of the property rights Superweak control; On the other hand, the state through administrative means, the appointment and removal of the operators, the company's management structure with a strong administrative color, usually difficult to form the internal governance structure of the market as the main checks and balances, the witch hunt, some listed company's chairman is also the CEO. Senior managers take advantage of the weak control of the government on the property rights actually in charge of the formation of the company, a de facto "internal control". The proportion of state-owned shares of listed companies in China, a higher degree of ownership concentration, but the monitoring efforts of the largest shareholder of the state-owned shares and efficiency than the weak, and our policy also provides that the state-owned shares can not be traded, the actual operator of the state-owned shares using their own advantages against small and medium-sized the interests of shareholders, the pursuit of maximizing their own interests. Related party transactions and other means, misappropriation of state assets, and ultimately harm the interests of the company, leading to underperformance of corporate governance. Therefore, the state-owned shares on company performance should be negative.
(B) the legal person shares
Legal person shares can not be listed with the state-owned shares in circulation, but the real holders, unlike the state-owned shares, as there is "the absence of owners. Because of legal person shares can not be freely traded like shares outstanding as companies operating efficiency is poor, the legal person shareholder can not "vote with their feet" mechanism constraints on the company. So, corporate shareholders must be very concerned about the company's management. In addition, the legal person shareholder through dividends rather than by trading the stocks for investment income, which also determines the legal person shares with investment rather than speculative. Therefore, the legal person shareholder pay more attention to the company's long-term economic interests. In order to obtain the return on investment, they are more incentive to monitor major shareholder and operator, the exercise of voting rights at the shareholders meeting, a place on the board of directors involved in the company's management. Legal person shares more than the state-owned shares have the characteristics of the "economic man". Moreover, the legal person shareholder is the company, enterprise or investment company for the purpose of the pursuit of profit, they more than other shareholders to participate in corporate governance, supervision of the business and making decisions about operating knowledge and ability, information asymmetry create moral hazard the probability is minimized. Visible, legal person shares in China's listed companies owner actively play the role of "supervisor" plays a good role in promoting the company's management, is conducive to the improvement of the company's operating results.
Table 1 shows the author's stake in 25 of the A-share market and the results of operations of the Company (the primary measure of operating results of listed companies in China net assets yield, so this article as the relationship of the main object of analysis) analyzed and compared.
As can be seen from Table 1, 000985 Daqing Hua Keguo, shares the proportion of up to 73.03%, return on net assets was only 2.49%, while the proportion of state-owned shares in companies with high like 000039 CIMC, its return on net assets of up to 20 % or more. Overall, the proportion of state-owned shares in the company with the ROE to changes in the opposite direction. The state-owned shares is too high is not conducive to the development of the company's performance. With the gradual increase in the proportion of legal person shares, the company's return on net assets also rebounded. Legal person shares is playing an increasingly important role in corporate governance.
(C) the outstanding shares
Tradable shares is China the only freely in the stock market traded stock. Outstanding shares of the company's governance plays a vital role in a healthy capital market. Direct impact on the volatility of the share price, the company's market value. China's securities market is still not perfect, the proportion of China's listed companies, a very small proportion of tradable shares tradable shareholders of small and medium investors, which is what we called "retail". Its shares in the shareholders' meeting on micro-small words, or simply could not make a substantial body of the general meeting. The supervisory role of the management of the Company is minimal. Therefore, most of the holders of tradable shares are speculative, they do not really care about the company's operating results, just the pursuit of marks on the stocks to get a temporary income, there is a serious "free rider" behavior. Tradable shareholders of the company is to "vote with their feet" mechanism to sell their shares once the problems immediately. The study showed that China's stock at a high turnover rate in the world, China's Shanghai and Shenzhen stock average annual turnover reached 504.7%, the equivalent of hands five times a year, while in the same period, New York, the average turnover rate is 67.1%, Tokyo is 40%, Hong Kong 57.9%, and 32.8% in Singapore, Taiwan and only 252.3%. Makes frequent turnover the tradable shareholders do not care about the company's results of operations, only care about the ups and downs of the stock price. China's securities market, the market price of the stock does not represent the company's actual operating conditions. Therefore, the outstanding shares have little effect on the operating results of listed companies. Ownership concentration on the company's results of operations

Ownership concentration includes three types: the high concentration of shareholding equity is highly fragmented and equity moderately concentrated. Generally the top five shareholders stake in the company and as a standard to judge the top five shareholders stake of more than 50% of the high concentration of between 20% and 50% equity moderately concentrated, less than 20% equity highly fragmented.
(A) equity interest in highly concentrated
When the high concentration of shareholding of the company, the controlling shareholder has the right to send direct representative or personally served as chairman of the foreign operation and ownership to unify, to effectively avoid the operator of "adverse selection" and "moral hazard" largest shareholder has absolute control over is conducive to the company's business incentives. When the high concentration of shareholding of the company, the company has an absolute controlling shareholder, the acquisition cost of the acquisition, mergers and acquisitions is difficult to occur. However, under current law inadequate protection of minority shareholders, when the absolute control of the company's equity by minority shareholders, the controlling shareholder at the expense of the interests of other shareholders as the cost to pursue their own interests rather than to maximize the value of the company to realize their own interests. As the controlling shareholder has absolute control over the board and the shareholders mere figurehead, proxy contest is often difficult to play a role. Controlling shareholder through improper related party transactions, the issue of guarantees for their own force listed companies occupy funds of listed companies, dividing assets of listed companies and other means hollowed listed companies, against the interests of small shareholders in listed companies at home and abroad is very common.
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