The Study On The Relationship Of The Split Share Structure And Company Performance

In China listed companies can issue two classes of shares: those which are listed on exchange and those which cannot (nontrade shares). The split share structure is an institutional obstacle that blocks the perfect of corporate governance of Listed Company and further development of the stock market. In this view, the essential character of equity structure is high-centralized equity and non-circulating of state-owned share and corporation-owned share. This fact results in a series of limitation of corporate control mechanism. For this reason, the concentration degree of the circulating stock rights seldom comes to the attention of the scholar. With the advancement of split share structure reform, how to optimize control mechanism under new circumstance is one of the problems that listed companies must take into consideration.In the background of split share reform in China, this paper first analyzes the limitation of control mechanism and the effect of the split share structure on the corporate performance, and then takes A-share listed companies in Shenzhen and Shanghai stock markets from the year 2003 to 2006 as research subjects. The paper divides samples into two groups which are reformed and non-reformed companies, so as to compare and analyze the performance of two types of companies, and further study the influence of circulating share ratio, concentration degree of non-circulating stock rights, and share proportion of the biggest shareholder on company performance. Finally, some suggestions are given on how to optimize control mechanism of listed company. Empirical analyses indicate that:(1) The concentration degree of circulating stock rights has positive influence on company performance. The higher the circulating share ratio is, and the more obvious this kind of influence is.(2) The existence of biggest shareholders has positive influence on the company performance.(3) The higher the counterbalance degree of the second biggest block holder to the controlling shareholder is, the higher the company performance is. But it is possible for top 2 block holders to reach some collusion to violate the right of the circulating shareholders.(4) The split share structure reform has positive effect on the stock market and the performance of the listed companies, but not long-lasting.