Research On Multiple Major Shareholder Structure,Diversification Strategy And Enterprise Value

The multiple major shareholder structure is common among companies in many countries and regions.The relationship and interaction between major shareholders increase the complexity and dynamic of the ownership structure's influence on the companies.This has caused wide attention in academic and practice circle.At the same time,more and more Chinese companies have been implementing diversification strategies in order to achieve further growth and development.However,the implementation of the diversification strategy may also be used as a unique means by the major shareholders or management to seek their private benefits.All these situations raise questions on how major shareholders,as the top decision-makers of a company's governing body,influence its diversification strategy,and how the influence of the ownership structure of multiple major shareholders on the diversification strategy may differ in different situations.How is the impact of diversification strategy on corporate value affected by the ownership structure of multiple major shareholders?What is the difference between state-owned enterprises and private enterprises?This paper attempts to perform an in-depth analysis and research on these issues.This paper first reviews the literatures in relation with the relationship between the multiple major shareholder structure,the diversification strategy and the corporate value and further refines the issues based on these literatures.Then,from the perspectives of the Theory of Principal-Agent,the Theory of Asset Portfolio,the Resource-based View and the Transaction Cost Theory,this paper analyzes the mechanism how the multiple major shareholders structure influences the diversification strategies,and proposes the hypotheses on whether the different multiple major shareholders'structures(e.g.number and equity weights of multiple major shareholders)have different level of influence.Next,it analyzes the situational factors of the influence of the multiple major shareholder structure over the diversification strategy and puts forward the hypotheses on the moderating effects from the quality level of corporate governance,the nature of corporate ownership and the external institutional environment.In addition,it further analyzes the influence of diversification strategy on the company value,and tests the moderating effects of time,the nature of equity and the ownership structure of multiple major shareholders.Finally,based on the research samples of 3,306 listed companies in Shanghai and Shenzhen Stock Exchange from 2004 to 2017,through collection of data,selection of variables and building models,the hypothesis proposed in this paper is examined and testified.The research data used in this paper is sourced from Wind database and CSMAR database and preliminary sorted in Excel software.The descriptive statistics,correlation analysis and regression analysis were performed through using Stata software.The main conclusions of this research paper are as follows:A company's diversification is obviously low level when it has multiple major shareholders,indicating that ownership structure of multiple major shareholders can restrain the degree of its corporate diversification strategy;The restraining effect on the degree of a company's diversification strategy becomes more obvious when the equity proportion of the other major shareholders(other than the largest shareholder)is higher;The quality level of corporate governance has a moderating effect on the relationship between the ownership structure of multiple major shareholders and the diversification strategy,which is specifically reflected in the fact that the more imperfect the corporate governanceis,the more significant restraining effect of the multiple major shareholders over the company's diversification strategy appears.This indicates that the multiple major shareholders structure has certain substitution effect on the quality level of corporate governance;When it comes to the nature of ownership and the influence from the ownership structure over the corporate diversification strategy,the restraining effects of the multiple major shareholders structure is more significant in private sector in comparison with the state-owned enterprises;The restraining effect of the multiple major shareholders over the corporate diversification strategy becomes more significant when level of marketizationin the region(where the company is located)is higher.Further tests on the impact of diversification strategy on cor;porate value shows that:The impact of diversification strategy on corporate value varies with time:it has a negative impact on short-term corporate value and a positive impact on long-term corporate value.The influence of diversification strategy on corporate value varies due to the different nature of the ownership:the diversification strategy of state-owned enterprises has a negative impact on corporate value,while the diversification strategy of private enterprises has a positive impact on corporate value.When there are other large private shareholders,the negative impact of diversification strategy of state-owned enterprises on corporate value is weakened;when there are other large state-owned shareholders,the positive impact of diversification strategy of private enterprises on corporate value is weakened.In addition,the degree of marketization has a further moderating effect.Through the theoretical analysis and empirical test of the relationship between the multiple major shareholder structure,the company's diversification strategy and corporate value,the contribution of this paper lies in:In terms of research perspective,this paper focuses on a special shareholder structure in the China's context,that is,multiple major shareholders'shareholder structure.In western corporate governance research,scholars mostly analyze the game and balance between shareholders and managers,and emphasize how to solve the first kind of agency problem.However,the agency problem in China's corporate governance is the second kind of agency problem between controlling shareholders and small and medium shareholders.Considering this situation,this paper focuses on the balance and game between different shareholders in the ownership structure of multiple major shareholders.In terms of research content,firstly,it extends the researches on the motivations of the company's diversification strategy.The existing researches on the motivations of diversification strategy identified the external factors such as market environment and the internal factors such as enterprise resources,enterprise life cycle.Based on these studies,this paper further introduces the multiple major shareholder structure as a new factor.When analyzing the influence of this factor on diversification strategy,this paper not only integrates the related theories of diversification strategy,but also introduces the second kind of agency problem in agency theory to analyze the motivation of diversification strategy,which enriches the literature on the motivation of diversification strategy.Secondly,it also complements the research on the implementation results of the company's diversification strategy.There have been studies on the economic consequences of diversification strategy,either positive or negative.This study shows that the impact of diversification strategy on corporate value is moderated by time,ownership nature,ownership structure and other different situational factors.Particularly,this paper logically analyzes and empirically tests that the effect of diversification strategy is significantly different due to the decision-making logic differences between state-owned enterprises and private enterprises,and the existence of other major shareholders can inhibit the diversification strategy decision-making of state-owned or private controlling shareholders.Thirdly,the study in this paper enriches the researches on the influence of the ownership structure of multiple major shareholders on the company's behavior.The existing researches focused on examining the influence of multiple major shareholders'structure on the performance,investment efficiency,innovation efficiency of a company.This paper focuses on analyzing the influence of the ownership structure on the diversification strategy of a company.Specifically,this paper reveals the internal mechanism of how other major shareholders implement diversification by checking and balancing the controlling shareholders.Fourthly,by analyzing the influence of the multiple major shareholder structure on the diversification strategy under different situational factors,it helps to better understand the mechanism of the influence from the multiple major shareholder structure on the corporate governance and strategic management.