Research On The Effect For Non-tradable Share Reform Of Listed Companies In China

Share-split is a situation that tradable and non-tradable stocks coexist in the listed companies of China. As a system defect that appeared in the past, Share-split results in many chronic problems that have seriously hampered the sustained and stable development of the securities market. In addition, it makes securities market of China lose many functions. Therefore, the reform of non-tradable share started.Share-split is a unique phenomenon and non-tradable share reform is a specific event in China's capital market. Faced with such a major reform of the capital market, we should pay the most attention to the result that the reform is successful or not. Then, does the reform of non-tradable share improve enterprises'performances? To which extent do enterprises improve performance? Not only the national leaders are eager to know the result, but also the listed companies, fund companies, institutional investors and many stockholders concern about. Research on this issue is the objective of this paper.At the beginning, following an introduction of the background of share-split, this paper describes the origins of the split share structure, then, introduces the gradual process of the reform and its ideologies. Then, it emphasizes on the necessity of the reform in the aspect of corporate governance, stock market pricing mechanism, the allocation of resources and so on.Secondly, the paper introduces the non-tradable share reform related theoretical basis and evaluation methods. The special ownership structure leads to the specialty between the agents, namely, non-tradable shareholders between tradable shareholders. The different interests result in invalid agent. In the circumstances of imperfect markets of control and manager, to the non-tradable shares, the supervision in tradable shares and the Board is of no effect. The defects of internal corporate management mechanism and the weakening of the external directly cause the failure in the allocation of control.Thirdly, we use the method of Financial Data and Factor Analysis Model to conduct empirical analysis of the 121 sample companies, which have completed the reform before 2005 on the Shanghai and Shenzhen stock markets. The results show that the total scores have the trend to increase, which means the reform enhances the performances of the listed companies. In the year of the reform came to be implemented, there was a sharp rise in corporate performance. In the second year, the performance slowed down. Then, in the third year, the performance increased again. The reform improves the governing performance and the reform is effective. In addition, compared with the overall listed companies in the means of the main financial indicators, we can find that, although the overall indexes of listed companies are on the rise, the sample companies'performances are better. To a certain extent, this shows that, in addition to the macroeconomic situation affecting performance of listed companies, the reform has positive effect in performance.In the last part, based on the issues on governance of listed companies in China, the paper puts forward some countermeasures and proposals on how to improve company governance and increase governing performances.