A Study On Equity Concentration Ratio, Corporate Governance And Corporate Performance Of Chinese Listed Companies

In the short period of over 10 years from the early 1990s till now, China's stock market has traveled the path that has taken the developed countries more than a hundred years. Great progress has been made either in terms of market capacity, trading facilities, supervision and regulation, or in terms of the number of listed companies. With the deepening of reform and rapid development of the economy, China's stock market enjoys immense space for further development. As the footstones of the stock market, the listed companies are playing a more and more important role in China's economic growth. However, problems do exist in the progress of the listed companies. Chief among these is their lack of good performance as a whole. This problem may become a major obstacle to the healthy development of China's stock market if we fail to address it in time. To a great extent, the cause of the problem lies in the particularity of their equity structure and the consequent poor efficiency of corporate governance. Based on a theoretical framework that is constructed in this paper, and in the light of equity concentration ratio, this paper studies the data of 1,059 listed companies in 18 industries, undertakes an empirical examination of their corporate governance and puts forward relevant suggestionsBy following the route of economics methodology, this paper expatiates the background of this study, its significance, the status of current study of corporate governance at home and abroad, the methodology to be adopted and the framework of analysis.Methods such as description, comparison and synthesis are employed to conduct a study of existing theories of equity structure and corporate governance as the theoretical basis for analysis in this paper. We observe that, with the transformation of business system from proprietorship and partnership to corporation, equity structure has evolved from single ownership to a diversified and decentralized structure. It explains why corporate governance has become the focus in this process of evolution and further expounds four variants of corporate governance theory including principle-agent theory, stewardship theory, stakeholder theory and control of insiders control theory, hence giving the viewpoints of this paper on corporate governance. This paper then analyzes the four representative models of corporate governance in the world, namely, the Anglo-American open market oriented model, the German-Japanese insider oriented model, the East-Asian family oriented model and the insider oriented model of the countries in transition. While recognizing the important role the system of independent director plays in protecting the interests of small stockholders in the Anglo-American open market oriented model, this paper also points out its existing problems. On this basis, we illustrate the theories of inter-industry linkage effects and dominant industries. Finally we analyze the formation and development of corporate governance model in China.The empirical study of the performance of listed companies in China is a comparative analysis from the angle of industrial structure, using the performance data of listed companies in 18 industries over the 2000 -2003 period. In this paper, we have used themethod of factor analysis and selected 12 financial indexes. Through an analysis of the principle factors, we obtain the total performance scores of 18 industries respectively and the total performance scores of 1059 listed companies respectively. Based on this statistics, both static and dynamic analyses are carried out which show that average performance level in monopolistic sector is higher than that in the competitive sector, that the average performance level in new industries is slightly higher than the average level in the 18 industries, and that the rise of average performance level in heavy and chemical industries is more rapid than that in textile and light industries, from which it can be inferred that China may have stepped into the stage of heavy and chemical industries. Taken as a whole, howeve...