China's Listed Companies Ownership Structure And The Optimization Study

By analyzing theoretically and empirically China's listed companies' ownership structure--its characteristics, formation cause and impact on corporate governance and performance, this paper tries to solve several difficult problems in China's stock markets such as whether and how to decrease the state shares proportion of listed companies, how to develop institutional investors, etc. This paper proves the special equity structure characterized as "Only one share-holder is big" and "Only part of the shares are publicly tradable" attributes to various drawbacks of China's stock markets, points out that overcoming these drawbacks depends on equity structure optimization of China's listed companies and gives some suggestions on how to realize the optimal equity structure .In chapter 1, this paper investigates the institutional changing process of China's state-owned enterprises, especially after the economic reform and opening up. The ownership structure of China's listed companies came into being abreast with the development of stock markets while the reform of state-owned enterprises entered a new stage of corporatization. The untradability of state shares and legal person shares is inevitable since China's overall reform is carrying out gradually.In chapter 2, this paper analyzes three major ownership structure models in overseas countries such as the German-Japanese model, the Anglo-American model and the East Asian model, then investigates the fractions of shares held by different share-holders during the past ten-odd years and the ownership distribution in mid 2002. Based on the international comparison, this paper summarizes the features of Chinese listed companies' ownership structure.In Chapter 3, this paper discusses the governance mechanism both inside and outside the listed companies analyzing the impact of ownership concentration on corporate governance, especially the effects of "Only one share-holder is big" which represents ownership over-concentration and the effects of "Insiders control" which represents ownership over-dispersion. This paper also analyzes the roles of different share-holders such as the state, managers, institutions, legal persons and individuals. At last, I analyze the effects of partial untradability of a company's shares on corporate governance.In chapter 4, this paper built a gaming model of different share-holders who make decisions to maximize their welfare. Due to the special corporate equity structures and market environment in China, the model tends to reach a speculationsolution unfavorable to welfare of the whole society since this solution means holders of untradable state shares tend to cooperate with institutional investors that controll tradable shares' prices to harm little share-holders. The existence of legal person share-holders helps to reduce this kind of speculation. In chapter 5, this paper assesses empirically the influence of managers-share-holding, employees-share-holding, equity concentration and "Only one share-holder is big" on corporate performance measured by "return to equity" and "return to net assets" in China's listed companies. Considering the possibility of listed-companies' giving false annual report to maintain their rights to offer more shares to present share-holders rather than distribute cash dividends, data from mid 2002 report are adopted. The empirical results are: managers-share-holding and employee-share-holding helps to improve listed companies' performance, equity concentration and "Only one share-holder is big" helps to increase overall return but not return from major business. Since the difference between overall return and return from major business reflects return from false reorganization, this result proves the argument above that large state share-holders tend to harm little share-holders through reorganization by false financial reports and over-concentration of equity or "Only one share-holder is big" in particular is unfavorable for the performance of listed companies. In comparison with the existing...