| As Equity Division Reform forwarded and completed, the Chinese Stock Market will create much more revenue for original shareholders, investment shareholders, and other related participants, thus giving rise to significant changes in the basic characteristics of China's stock market. Under such circumstances, it becomes very important to study the distributions and changes of various yields in China's Stock Market.As the main theoretical innovation of this paper, in the view of the unique ownership structure of China's stock market, total yield is defined as follows:Total Yield = Investment Shareholders' Yield*Tradable Share + Original Shareholders' Yield*Non-tradablc Share + Other Participants' YieldOn the ground of this definition, a theoretical model is established to analyze the influence on total yield by changes in the structure of China's stock market at different stages of development The conclusions drawn from the model explain the meaning of Equity Division Reform.The core point of this paper is: The unique divided structure of equity in China's Stock Market has made research into stock market returns more complicated. As the theoretical basis for other related stock market issues, we use total yield of China's Stock Market to measure the overall returns in the gradual settlement of equity division. By studying the trend of total yield changes, we found that the income distribution of China's Stock Market will have a significant structural change as Equity Division Reform forwarded. In the long run, by improving the management of listed company mechanism, rationalizing relationships among various stakeholders, the Equity Division Reform will enable investment shareholders and original shareholders to have consistent return functions, contributing to the overall revenue maximization. Therefore, we should recognize both the inevitability of restructuring stock ownership and its long-term and complex nature.In this paper, the total yield model is mainly used to discuss the influences of financing and equity structure to total yield, together with references to corporate profits and taxations, P/Bs and circulation market values. Through theoretical analysis and empirical tests several conclusions of China's Stock Market are summarized:From the composition of capital market structure, in order to obtain a controlling position in the listed company and enjoy all the profits from the company's long-term development, funds will be more concentrated in the hands of institutional investors. Large, professional private funds with more experiences in financing and investment will emerge. Proportion of retail investors significantly lowers. Value investments will replace speculations. Normative operation of the market will be greatly enhanced.On the historical position of the capital market, the diminishing original shareholders' contribution to total yield illustrates the weakening role of stock market for state-owned enterprises reform. While the strengthening investment shareholders' contribution to total yield means that China's Stock Market is improving the efficiency of capital allocation and accelerating the development of the market economy.On the perspective of capital market operation system, with transformation of controlling shareholders' nature, the issuing, trading, regulation, financing, mergers and acquisitions of stocks will undergo a fundamental restructuring. The criteria of total yield maximization will be applied to examine the reasonableness of enterprises.From the view of shareholders' interest function, in the past original shareholders focused their attention on the amount of financing rather than profit growth. As Equity Division Reform forwarded and completed, controlling shareholder's yield has a gradual convergence to total yield. Maximizing market value of assets is increasingly becoming the majority shareholders' common goal. Equity encouragement, as a long-term incentive mechanism, enables operating managements pay more attention to the actual performance of company development. Controlling shareholders become increasingly rational. Financing preference will undergo significant changes. Proportions of debt financing and endogenous financing will be greatly increased.With reference to government regulation, company profits contribute more to total yield. Capital market is increasingly influenced by economic entity in the positive direction. China's "Gradualism" Reform of Economic System indicates that "Policy Market" will exist for a long time. However, controlling strategy will divert from direct positive or negative news releases to indirect methods, such as economic variables controlling and structural redirecting.This paper is divided into five parts: Research Background, Theoretical Model, Model Interpretation, Empirical Testing and Summary. In Research Background part literatures on stock yield and equity structure are summarized, and current development of China's Stock Market is briefly introduced. Theoretical Model starts with analyzing the basis for China's Stock Market before Equity Division Reform, and steps forward with the concept of total yield. Besides, it defines the main area of research and study in this paper. Model Interpretation and Empirical Testing parts focus on the topic of total yield model. Important conclusions drawn from former parts are systematically illustrated in the last part of the paper. |
