A Study On The Relationship Between Ownership Structure And Efficiency Of Board From The Perspective Of The Moderating Effects Of Company Complexity

Research on ownership structure is much popular in China’s capital market in recent years, and it is the basis of research on corporate governance. Ownership structure of a company determines its allocations of control power among the shareholders, the discourse and decision right of shareholders and at last the performances. In addition, the distribution and regulation mechanism of control power among shareholders, which is based on ownership,has evolved into internal governance mechanism. One aspect that should be given priority is that ownership structure does not have a direct influence on the performance of a company,but instead, it is the board that carry out actual governance on the company. The board is the decision-making body elected in the general meeting of shareholders and is commissioned by the general meeting of shareholders to exercise the duty of management and leadership.Therefore, it is the leadership hub of a company. The market performance of a company is, in effect, reflected by the governance of the board, and further, by the efficiency of the governance. Since board is an agent organization of ownership structure, this paper established the research logic of “ownership structure—efficiency of board ”.The efficient governance of board shows great market performance, and the key is to find out the ownership structure behind this efficient governance, i.e. what kind of ownership structure leads to efficient governance of board and then perfect market performance with efficiency of board as the key of research, this paper measures the efficiency of board of listed companies in the governance input-output model of board, with the tools of quantitative analysis. Then the attribute of different ultimate controller ownership and the efficiency of board of listed companies are analyzed in detail. Taking ownership structure of listed companies as the starting point, this paper uses ownership concentration, separation of“two” rights and stock proportion restriction as the standard to measure the ownership structure, and uses the attribute of ultimate ownership controller as the standard to test influence of different ownership structures on efficiency of board. Ownership structure plays a decisive role on efficiency of board and so does the internal structure of board. In order to achieve the comprehensiveness and integrity of research, this paper also studies the influence of governance structure of board under different ultimate ownership controllers on theefficiency of board. In the study of the efficiency of board and ownership structure on the impact, we should also consider that the efficiency of board and company existing condition are interrelated, Board governance are also affected by the company’s differences and the complexity of its operating character, this complexity acts as a discretionary behavior in the field of corporate governance. From the perspective of the company complexity, this paper examines the moderating effects of the company complexity on the relationship between ownership structures and efficiency of board.The conclusion is as follows:In general, board of listed companies shows low efficiency. The value of only 250 samples reaches state of efficiency. The mean of efficiency of board of sample companies from 2009 to 2013 shows the trend of upward before downward. From the perspective of attribute of ultimate ownership, private enterprises show greater efficiency of board, followed by local state-owned enterprises and central state-owned enterprises successively. It indicates that private enterprises do a better job than state-owned enterprises in corporate governance.From the analysis of the change of Malmquist index, we can see that governance of board of listed companies improves comprehensively and governance of private enterprises is better than that of state-owned enterprises.The overall sample indicates that share proportion of ultimate controllers is negatively related with the efficiency of board. The fact of having one absolute controlling shareholder goes against governance of board and the sums of share proportion of shareholder groups show inverted U relationship with efficiency of board. This works the same with local and central state-owned enterprises. For private enterprises, the share proportion of ultimate controllers is negatively related with the efficiency of board, but the share proportion of the first three and first five shareholders shows positive U relationship with efficiency of board.In addition, for all ultimate controllers, stock proportion restriction is negatively related with the efficiency of board and it helps to improve the ability of ownership balance degree.Separation of two rights is negatively related with efficiency of board and will weaken the control of board, which goes against the improvement of efficiency of board.From the analyze of the moderating effects of the company size on the relationship between ownership structures and efficiency of board, the different sample group regression shows the company size enhances the negative correlation between ultimate controllingshareholders and efficiency of board. The company size enhanced the relevant relationship between the first three and first five shareholders and the efficiency of board. Company size enhanced the relevant relationship between the separation of two rights and the efficiency of board, so does the ownership balance degree. However, for the central state-owned enterprises,the company size makes the U-shaped relationship between the ultimate controlling shareholder and the efficiency of board more significant From the analyze of the moderating effects of the company diversification on the relationship between ownership structure and efficiency of board, the different sample group regression shows the company diversification enhances the negative correlation between ultimate controlling shareholders and efficiency of board. The company diversification enhanced the relevant relationship between the first three and first five shareholders and the efficiency of board. The company diversification enhanced the relevant relationship between the separation of two rights and the efficiency of board, so does the ownership balance degree. However, for the central state-owned enterprises and the local state-owned enterprises, the company diversification weakens the relationship between the ownership balance degree and the efficiency of board. The possible reason is the transaction costs of internal coordination increases after the increase of the ownership balance degree.The innovations of the paper:This paper establishes the analysis system of “ownership structure—efficiency of board ”,which is based on the assumption that ownership structure decides the features and governance mechanism of board. From the perspective of distribution and attribute of ownership structure, the paper analyzes how ownership structure could influence efficiency of board. It is the research idea as well as important innovation of this paper.In the input-output model, this paper selects 17 indexes in 5 index systems to measure efficiency of board. To be specific, this paper studies the relationship between corporation performance and efficiency of board. And it involves more variables and indexes of behaviors of board, which makes the measuring index more diversified and systematic.Board governance are also affected by the company’s differences and the complexity of its operating character, From the perspective of the company complexity, this paper examines the moderating effects of the company complexity on the relationship between ownership structures and efficiency of board. Under conditions of different company complexity, thispaper investigates the changes about the relationship between the ownership structure and the efficiency of board from the complexity dimensions of company size and company diversification. This research enriches content for the research of board governance, we has a more in-depth investigation about the relationship between the ownership structure and the efficiency of board.This paper establishes the research framework of empirical test which is grouped in accordance with the attribute of ownership. To be specific, it measures efficiency of board from different ownership of ultimate controllers. The sample is divided into three parts:central state-owned enterprises, local state-owned enterprises and private enterprises. Then regression analysis is conducted. This research framework is of positive implications towards establishing and improving mixed ownership enterprises. In addition, these studies can refine the research process and avoid concealing some real information.This paper is of great and practical implications to improve governance structure and governance level of board of listed companies, and by extent, achieve sustainable development of listed companies, protect the interests of investors and promote the development of capital market and national economy. In addition, the research point“efficiency of board ” of this paper could help to extend the research field and research practice of enterprise governance of listed companies at home and abroad. The Third Plenary Session of the 18 th CPC Central Committee has put forward reform measures of promoting the development of mixed ownership. From the perspective of efficiency of board, this paper researches what ownership structure could lead to perfect efficiency and the influence of governance structure of board on efficiency of board. From the perspective of the company complexity, this paper analysis the moderating effects of the company complexity on the relationship between ownership structures and efficiency of board. The conclusion of all these researches could provide constructive experience for exploring new mixed ownership in the future.