Research On The Relationship Between Managerial Ownership And The Performance Of Chinese Listed Companies

The separation of enterprise's management and ownership, led to the agency problem. In order to solve the agency problem, we need to have a set of incentive and restraint mechanisms, making agents to maximize the welfare of the clients. With the carrying on of the shareholder structure reform and the promotion of the capital market, more and more executives of listed companies holding their company's shares, and people pay more and more attention to the research on the relationship of managerial ownership and performance of companies. Managerial ownership as a long-term incentive mechanism, intended to reduce agency costs, improve operating efficiency, increase business value.The thesis mainly uses empirical research, induction and deduction method, comparative analysis method, Combined with shareholder structure reform and executive ownership practice, study the relationship between managerial ownership and corporate performance. Through the principal - agent theory, human capital theory, signalling game and incentive theory four areas carried out a detailed theoretical analysis, and lay a theoretical foundation for empirical research. On the basis of analysing listed companies'managerial ownership, through statistical analysis and description of regression analysis revealed the relationship between executive ownership and the corporate performance. We research the results of the empirical testing and identifying the possible impact of the deep relations between the two. We selected 376 listed companies issued before 2003.12.31, on the Shenzhen Stock Exchange, Shanghai Stock Exchange as research samples who issued A-shares only, According to China's listed companies'annual reports disclose between 2004-2006, pick up the information of the management shareholdings, the annual salary of executives, the company size, earnings per share, asset-liability ratio, and other relevant information; definition executives as disclosed in the annual report of the listed companies: supervisors and other senior management staff; managerial ownership include Common Stocks, virtual stock option, exercised of options, restricted stock, and so on; chosen Tobin's Q value, earnings per share(EPS) as a measure of corporate performance; chosen the annual pay, entity size, the nature of property right of listed companies and etc as control variables; build multiple linear and nonlinear model, using least square method and quadratic equation iterative method test the relationship between managerial ownership (MS) and corporate performance (Tobin's Q, EPS). Empirical studies show that managerial ownership has effect on corporate performance for China's listed companies. The main reasons for managerial ownership has weak correlation with corporate performance are: limited amount of shares, incentives mechanism insufficient, and the domestic supervise environment does not have all the required conditions, such as ineffective of the capital markets and manager markets, internal governance mechanisms invalidated and etc. The above reasons seriously constraints the effect on the incentive mechanism. At last, the essay analyses the reasons of the empirical results and proposes the advice from several different aspects, including improving the out environments of managerial ownership setting, improving the pay structure setting, boosting the managerial ownership and resetting the resource structure. It will accelerate to Chinese listed company governance and the development of Chinese capital market.