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Literature review of the effects of the nature of the controlling shareholder equity of the enterprise value

Author: LuoRenFeng BoYunYing From: www.yourpaper.net Posted: 2010-04-03 05:07:20 Read:
[Abstract] article according to traditional methods and the latest ultimate property rights theory classification equity nature of the controlling shareholder of China's listed companies are classified, and thus the nature of the controlling shareholder equity under two different classification to sort out the impact of the enterprise value . The results found no unified conclusion: The findings of the existing literature. I hope combing through the literature to understand the shortcomings of the traditional classification and Ultimate Ownership of classification rationality and Ultimate Ownership of classification applied to other areas such as corporate governance research outside blockholders.
[Keywords] controlling shareholder; equity nature; classification; enterprise value

The ownership structure is one of the most important factors affecting corporate governance, the proportion of shareholding and ownership of the properties have a great impact on enterprise value. Chinese securities market equity split the state's long-term existence, according to the state-owned shares, legal person shares and circulation of shares of the traditional way of conduct classification of practice has many deficiencies, the main problem is the unclear legal person shares ownership of the properties, it what is belonging to the state or non- The countries all; if it belongs to the state, it is by the central government or local government control, are unknown. Corporate shares as an independent shareholding main state-owned shares, outstanding shares tied is unreasonable. The studies made on this basis may be astray, so that the study results representative enough. La Porta et al (1999) pursue ultimate controlling shareholder of the new research mode just can resolve corporate shares ownership of the property of the problem, after Liu Shao Jia such as a large number of Chinese scholars are applications of the methods listed companies in China holding the main re-conduct classification, clear the ownership of corporate shares property, open up the scope of the study, and come to some conclusion. So in this article I hope to comb through the literature, the analysis of the shortcomings of the traditional classification and Ultimate Ownership Theory superiority of classification, and hope to be able to this new model is applied to the study of other aspects of the equity structure.

One, the nature of the controlling shareholder's equity divided into state-owned shares and legal person shares and tradable shares in the traditional way

(A) controlling the ratio of enterprise value into a linear relationship
Xiaonian (1997) empirical results show that the listed companies on the Shanghai and Shenzhen, the higher the proportion of state-owned shares of the company, the worse the performance; legal person shares the higher the proportion of the company, the better the performance; proportion of individual stocks and corporate performance is almost independent. Between weekly industry safety (1999) on the relationship between the properties of the shareholding structure with net assets income rate of testing draw A shares, the state-owned shares, legal person shares of proportion with net assets income rate have a significant positive correlation relationship, while the B shares and H shares negative correlation between the proportion of net assets yield. Zhang Hongjun (2000) 1998 385 listed companies of the empirical analysis that a significant positive correlation relationship of the top five shareholders and company value, and the presence of corporate shares also have conducive increase in the value of the company, but he also pointed out that, due to the large The shareholders basically state-owned shares and legal entity, so the research results are interpreted as the relationship between the state shares and corporate shareholders ownership concentration and corporate performance, does not represent a general sense of ownership concentration and corporate performance. Chen Xiao, Jiangdong (2000) that the negative impact company performance of state-owned shares and legal person shares and tradable shares a positive impact on corporate performance are only set up in the highly competitive electronic industry, and in a relatively weak competitive business and the utility is not established. Xiaoyue and Xu Xiaodong (2001) found that the proportion of outstanding shares and corporate performance in the non-protected sex industry, negative correlation was not significant, the relationship between the state-owned shares and legal person shares and corporate performance. However, options, corporate and Song Yong (2001) found that, in the the competitive incentives appliance industry listed companies, ownership structure did not significantly affect the value of the company, they believe enhance the evaluation of the capital market listed company strategy, business performance results and the quality of corporate governance function and control of the acquisition function, listed companies can promote shareholding structure is conducive to driving long-term sustainable development and shareholder value growth. Du Ying and Dealing (2002) found that the proportion of state shares and corporate performance significantly negatively correlated with the proportion of corporate shares and corporate performance significantly positively related to the proportion of outstanding shares and corporate performance. Sun and Tong (2003) found that the state-owned shares has a negative impact on corporate performance, corporate shares have a positive impact on corporate performance, foreign shares of the company's performance did not significantly affect. Zhang Guolin and Zeng Qi Zhang Hongjun (2000) the same performance measure (2005), but reached a different conclusion. They found: the proportion of state-owned shares and the results of a negative correlation between the proportion of legal person shares the results of a positive correlation between study by the Shanghai and Shenzhen stock 171 listed companies. Therefore, they believe, should be appropriate to reduce the stake of the state shares, to increase the stake of the corporate shares, in order to improve the corporate governance structure of Chinese enterprises, and to improve the company's operating results, and to promote the efficient operation of the securities market healthy development of the national economy. The Angle and Zhang tat packet inspection practices draw Wei, Xie and Zhang (2005) (2008), packet description of the nature of the largest shareholder and largest shareholder, and regression analysis showed: when the largest shareholder is the state-owned shareholders the value of the company significantly reduced, while the largest shareholders for general corporate value of the company can improve, but the result was not significant.
(B) controlling the ratio of enterprise value into a non-linear relationship
The Wushu Kun (2001) An Empirical Study of the listed companies in 1997-2000: ownership structure and corporate performance is a "U" shaped relationship, that is, the proportion of state-owned shares and corporate performance curve related. When the lower stake of state-owned shares, the proportion of state-owned shares and corporate performance negatively correlated; When the state holding more negatively correlated with company performance; higher proportion of corporate shares, and company performance was positively correlated. Kong Aiguo, Wang Shuqing (2003), the environment in 2001, the principal-agent conflicts has not the main problems facing the company, so come to the state-owned shares of the largest shareholder is positively correlated with corporate performance, corporate shares and enterprise performance " U "shape, the outstanding shares and performance of the company presented a" U "shaped structure. They found that the nature of the ownership of the largest shareholders of the listed company, its performance of the company. When the largest shareholder of the company to a non-state-owned shareholders with higher performance, more flexibility in management, corporate governance, more efficient, more from the internal market supervision and encouragement. In addition, they also found that tradable shares is not the better. Wei, Xie and Zhang (2005) found that the result then is: state-owned shares and legal person shares with Tobin's Q value significantly negatively correlated, and was obvious nonlinear, being U-shaped relationship, foreign shares is Tobin's Q value significantly with a positive correlation .
In summary, there is no unified conclusion of the relationship between the nature of the enterprise value of the controlling shareholder's equity. The basic conclusions of the study are: the proportion of state-owned shares is negatively correlated with the value of the company, while the proportion of corporate shares and the proportion of tradable shares is positively correlated with the value of the company. It should be noted that the relationship is not static, it may be linear or non-linear, and also may be influenced by the conditions of competition in the industry.

Second, the controlling shareholder's equity nature to distinguish
Ultimate Ownership Theory

As the Chinese securities market equity split the state's long-term existence, Chinese traditional equity structure research is on the outstanding shares, legal person shares, the state-owned shares of the classification of the basis of conduct of, although the emergence of a very rich research results, but this equity classification way there is a lot of lack of an important flaw is that it did not clearly indicate that the corporate shares ownership of property: As enterprises or economic entities with legal person status, these corporate shareholders whether state-owned or non-state is unknown, these corporate shareholders very The enterprise is ultimately controlled by the central or local government or agency. If this is the case, then the government corporate shares as an independent shareholding main state-owned shares, tradable shares the parallel is unreasonable, since the government-controlled corporate, legal and controlled entities, the ultimate owners of the enterprise should instead corporate entity itself. Practice of legal person shares of the state-controlled as a separate holding body independent of the state is bound to make many engaged in the ownership structure of the enterprise performance go astray, resulting in lack of representativeness of the findings.
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