China's Non-tradable Share Reform Of Listed Companies Effect

This article focusing on the non-tradable share reform, one of the China's capital market activities in the historic changes, in order to target the domestic listed companies as an attempt to in-depth analysis of listed companies in China non-tradable share reform effect. That a listed company after the completion of share reform, the various aspects of internal governance level will have some new changes and these changes will make what effects to the public shareholders, creditors, outside investors and other relevant interest groups. Through study of these issues can be make a more clear understanding to listed companies after the split share structure reform, also will understand on the full circulation market, the listed companies will face which new problems, and facing which new opportunities and challenges, so as to advance the development of a better future and lay a solid foundation. Therefore, this article chose the Shanghai and Shenzhen A-share listed companies between 2005 and 2008 as the sample, combined standardize research and empirical studies, and empirical research as the main line of methods, comprehensive use of the relative theories of corporate governance, such as ownership structure theories, agency costs theories, and debt governance theories, in-depth research of listed companies in China non-tradable share reform effect.This main structure is divided into six sections. The first part is an introduction; brief reviews the split share reform process, and explained the purpose of this study, significance, rationale, logic methods and content. The second part of the research related to the non-tradable share reform, agency conflicts, debt governance of domestic and foreign research literature review, And briefly comment on these documents, on this basis raised the questions will be studied of the issue. Third to the fifth part is the core of this paper, separately empirical the non-tradable share reform influence on the internal governance structure of listed companies in China from the aspects of company performance, ownership structure and agency costs, free cash flow and debt management. The third section examines the non-tradable share reform influence the performance of listed companies; with different payment options on the price performance of the company will be implications. The empirical results show that the share reform perform a significant role in promoting for the performance of listed companies; in the course of the non-tradable share reform, the performance of listed companies which use of capital adjustment payment on the price with a significant increase; other ways, such as cash on the price and the price of the warrants on the effect of enhancing company performance is not significant.The fourth part focuses on how the equity structure of listed companies and the agency cost will be the trend after the non-tradable share reform, and examining the influence of equity structure on agency costs. The results show that the listed company after the completion of share reform, which showed a gradual decline in agency costs; ownership concentration the rise; equity degree of checks and balances decreased; upward trend in the proportion of institutional ownership. In the special system environment of China, the listed company focused on help inhibit the agency shares the cost of production, stock checks and balances has failed to play its proper checks and balances, institutional holders on the agency costs are significantly inhibited. These results show that the listed company is in the role of non-tradable share reform, and optimized their ownership structure from the three aspects of ownership concentration, shareholder equity, and institutional checks and balances. The optimized ownership structure enhance the the agent's control ofcontrolling shareholder, and strengthened the company's behavior outside shareholders supervision, ease the agency conflict between shareholders and the management, which effectively inhibit the production of agency costs.Part V discusses the influence of non-tradable share reform on free cash flow, debt governance of China's listed companies; then test impact of free cash flow on the the debt governance structure of listed companies, and analysis the impact of such changes on debt governance structure of listed companies. Test results showed that the completion of share reform companies whose financial leverage is on a declining trend, while the long-term debt is on a upward trend. It is suggested that the implementation of non-tradable share reform of listed companies in China to improve its environment of debt governance, and performance to optimize the capital structure of listed companies. To complete share reform of listed companies in its free cash flow was increased, and the earlier completion of share reform companies, its free cash flow, the greater rate of increase. However, free cash flow on capital structure on the impact of empirical results found that, although the increase in free cash flow, reduce total debt levels of listed companies, but also reduces the long-term debt of listed companies and the level of long-term bank borrowings. It is suggested that the increase in free cash flow, but worsened the debt of listed companies'governance environment, it is necessary to strengthen business activities in the future management of the free cash flow.Part VI based on the conclusion of the study of the previous paper, put forward related policies constraints from six proposal, such as the major shareholder of behavior, effective supervision of the Board and the Supervisory Board, professional managers of the market complete, transparent information disclosure system, capital market financing channels diversify, and improve legal protection for investors. Covering the field of corporate governance, capital markets and legal systems, expect China's capital market will be better improved after the resumption of normal flow. At the same time, ensure all of the stakeholders can be a sound legal system and common development under the better supervision and protection.