Ownership Structure And Firm Performance

This paper does a study on the relationship between ownership structure and performance of listed companies. The ownership structure of listed companies in China has some special features:a large portion of equity is not circulated in the market; state owned equity dominates; the phenomenon of "same equity with different price" is prevalent. Since 2006, the reform of non-tradable shares has mitigated this situation. In this background, we focus on the ownership structure change before and after the reform, examining whether it has improved the firm performance or not. In particular, we pay attention to the effects of reform to the performance through ownership structure. We selected a sample from SZSE with a 2003-2010 panel data. Using fixed effect method and considering the endogeneity problem, we found that ownership concentration has a U shape correlation with firm performance, majorly through the monitoring effect and expropriation effect. We also found that the reform of non-tradable shares has improved the performance to some extent, but the long term effect is still ambiguous.