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An Empirical Analysis of ownership structure and corporate performance of listed companies in China

Author: LiJiChao From: www.yourpaper.net Posted: 2010-02-22 11:57:44 Read:
Abstract: China's Shanghai and Shenzhen A-share market in 2008, the data, the effects of ownership structure on corporate performance. The empirical results show that: the proportion of state shares and corporate performance into a U-shaped relationship between the proportion of outstanding shares negatively correlated with the results of the square of the ratio of the proportion of corporate shares, and the largest shareholder H1 index is positively related to corporate performance. According to the results of empirical analysis, recommendations to improve company performance from both optimize the equity structure of listed companies and improve the market mechanism.
Keywords: ownership structure; corporate performance

1 Introduction

China's capital market gradually from a closed to an open, are in a transition period, the governance of listed companies is inevitable, there are many problems. The characteristics of China's listed companies is: most of the state-owned shares of listed companies in a position of absolute control. This special ownership structure, the core of corporate governance, including not only the coordination of interests between management and shareholders, more coordination between the largest shareholder of the split share structure and the medium and small shareholders interests. Choose what the equity structure of listed companies is the most important strategic decisions. The purpose of this study is an empirical analysis of the relationship between shareholding structure and performance of China's listed companies, in order to optimize the equity structure of listed companies in China to explore the target mode.

The 2 study Assuming

2.1 Ownership Concentration and Corporate Performance
Foreign research and practice show that the shareholding structure of a country's underdeveloped capital market mechanism, under the laws of investor protection unsound mode generally tend to centralization, concentration of ownership is the lack of legal protection to shareholders an alternative centralized by the improvement of the efficiency of internal governance of the equity interest in a certain extent, to make up for the lack of external governance mechanisms. The development of China's securities market time is relatively short, the external monitoring of the environment and the laws and regulations are not sound, ineffective laws and regulations on investor protection investors only through equity concentrated form in order to effectively monitor the behavior of the agents of the controlling shareholder, reducing agency costs, if a listed company equity is more concentrated, the largest shareholder of listed company by themselves, and their revenue was mainly attributable to themselves, have the power and pressure of listed companies should do a good job, and will use their own various resources to support the development of the listed companies.
Based on the above analysis, the proposed hypothesis 1.
Assumption 1: The stake of the largest shareholder of listed companies in China with the results of a positive correlation.
2.2 shareholding structure and performance of the company
Countries different from the general sense of the major shareholders in the status of the major shareholders in listed companies, the lack of national equity client virtual spaces, and exit mechanism, the lack of real exercise control over the agent continued motivation and restraint mechanisms. When the the national shareholding ratio is low, due to the power problem and the lack of effective monitoring, but when the proportion of state-owned shares increased to a certain extent, the improvement in the level of attention of the government, and in recent years, monitoring power intensive, but will help improvement in corporate performance. And national shareholders are often out of the consideration of the special investment purpose, will give special promotions, these companies have a competitive advantage, which showed good results.
The proportion of the outstanding shares of the performance of listed companies, external monitoring function through the stock market. But in our country, the holders of tradable shares is generally difficult to have a greater impact in corporate governance. This shows that the increase of the outstanding shares of a negative impact on the performance of listed companies.
Based on the above analysis, Hypothesis 2, Hypothesis 3 and Hypothesis 4.
Assumption 2: The proportion of state-owned shares and the performance of the company was a U-shaped relationship.
Hypothesis 3: The proportion of legal person shares the results of a positive correlation.
Hypothesis 4: The proportion of outstanding shares and the results of negative correlation.

Sample selection and variable definitions

3.1 Sample Selection
In this paper, in 2008 for the study window, the application of the relationship between the Chinese listed companies cross-section data analysis shareholding structure and corporate performance. In order to ensure the validity of the data, to minimize the impact of other factors on the company's share price information, this article removed incomplete record and abnormal sample values. Finalize the 1381 listed companies for the final study sample. This article data from financial research database, RESSET, the annual reports of listed companies and the huge influx of information network. The metering package used in this article is EVIEWS6.0.
3.2 variable definitions
The variables used in this article include explanatory variables to explain the three types of variables and control variables. The explanatory variables are indicators of the performance of the company, with ROE ROE representatives. The explanatory variables were inspected from the perspective of equity composition and Ownership Concentration. From the equity constitute angle is divided, including the proportion of state-owned shares SSP, the proportion of corporate shares LSP and the proportion of tradable shares TSP variable. Ownership Concentration square and H1 of the selection of the company's first big shareholder equity ratio. In this paper, the company's growth (Main the business margin Grow), financial leverage (gearing ratio DAR) and company size (the total assets of the natural number of Log (Size)) three variables in order to make the model economically explanatory power, Control. Specific definitions are shown in Table 1.


4 ownership structure and corporate performance regression analysis

4.1 model
According to the study assumptions and variables are defined, I establish the following model, which the model investigated performance of the company and ownership concentration degree of relationship, the model 2,3 examine performance of the company and equity constitute relationships.
Model: 1
ROE = 0 1 Grow 2 DAR 3 Log (Size) 4 H1 u
Model: 2
ROE = 0 1 Grow 2 DAR 3 Log (Size) 4 SSP 5 SSP 2 6 TSP u
Model: 3
ROE = 0 1 Grow 2 DAR 3 Log (Size) 4 LSP 6 TSP u 4.2 regression analysis and interpretation
(1) ownership concentration and the results of the regression analysis results.
The regression results of model 1, adjusted R 2 = 0.349539 F statistic P value close to 0, the model better fit. , Said the equity concentration H1 coefficients t values ??corresponding p = 0.0000 explanatory variables in the explanatory variables H1 ROE have a significant impact on the statistical significance. By H1 coefficient 0.101177 seen H1 of ROE showed a significant positive relationship.
Ownership concentration and the results of the regression results show that the statistical significance, the square of the proportion of the largest shareholder of the listed company and H1 index have a significant impact on the company's performance. A positive relationship between H1 and the performance of the company, the greater the stake of the largest shareholder, the greater the company's ROE, the better the performance of the company; greater control over the largest shareholder, controlling shareholder of listed companies to consider More and more consistent with the interests of the listed company, will find a way for themselves and for the company to seek development opportunities, thereby increasing the level of performance of the listed companies. The regression analysis of the results confirmed the hypothesis 1.
(2) the shareholding structure and the results of the regression analysis results.
The regression results of model 2, adjusted R 2 = .357634 F statistic P value close to 0, the model better fit. The proportion of state-owned shares SSP and SSP ^ 2 coefficient t values ??corresponding p close to 0, indicating that the explanatory variables SSP and SSP ^ 2 on the explanatory variables ROE have a significant impact on the statistical significance. By SSP and SSP ^ 2 coefficient of -0.001626 and 0.000025 seen: the impact of SSP on ROE showed a significant U-shaped relationship.
The regression results of model 3, adjusted R2 = 0.358475 F statistic P value close to 0, Model 3 fits better. Said the proportion of corporate shares the LSP coefficient of t value corresponding p-almost to 0, indicating that the explanatory variables LSP have a significant impact on the statistical significance of the explanatory variables ROE. LSP coefficients 0.000594 known positive relationship between LSP on ROE.
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