Research On The Influence Of Ownership Concentration On Family Companies Operating Performance

Recently, as state efforts to support the private economy continues to increase and capital market continues to improve, more and more family business begin to raise funds through the Capital Market and has become important forces to promote the development of China's securities market. Although compared to other types of listed companies family listed companies are more complicated, its essential feature of economic organization necessarily indicate through general quantitative indexes. Shareholding structure precisely reflects these essential characteristics.This article focuses on ownership concentration which is one aspect of ownership structure and chooses the family listed companies in Shanghai and Shenzhen stock exchange between the year 2006 and 2008 as the sample to study the influence that ownership concentration has on family listed companies'operating performance based on overseas and domestic related research results. This article chooses the first shareholder's percentage of stocks, the proportion of the top five shareholders'percentage, Z index and H5 index to measure the degree of ownership concentration. By statistical description, we found that the current family listed companies in China showed a condition that the shares high concentrated in the top five shareholders, relatively concentrated in the state's largest shareholder, and the proportion of the top five shareholders was disparate. On company's operating performance evaluation, as previous studies used sole indicator, whether or Tobin's Q have their intrinsic defects, so this article consider 12 indexes of operating ability, earning ability, repaying ability and growing ability to get a comprehensive operating performance by using Factor Analysis. And then study the influence that ownership concentration has on family listed companies' operating performance. Through correlation and regression analysis, this article gets the conclusion that the relationship between ownership concentration and comprehensive operating performance is upside-down U, that is when the ownership concentration is low, the company's operating performance will improve with ownership concentration enhances and when the ownership concentration is high, the company's operating performance will decrease with ownership concentration enhances.The major contribution of this article is that this article conducts comprehensive evaluation of family listed companies'operating performance and gets a comprehensive score by using Factor Analysis. This will help to further improve the system of performance evaluation and also to lay a good foundation for empirical analysis.