Analysis Of The Relation Between Ownership Structure And Stock Liquidity Of Chinese Listed Companies

Rational ownership structure is the basis of increasing the listed companies'stock liquidity, and excellent stock liquidity also can optimize the ownership structure. Therefore, there is a close relationship among equity ownership structure and stock liquidity. Because of the differences in society, culture, society and economic circumstances, companies'ownership structure in each country still differ greatly, so do the effect approach to the stock liquidity. This paper especially pays attention to these differences. Through the full and embedded analyses on ownership structure, we can find the way to affect the listed companies'stock liquidity and the relations between them.selecting 976 listed firms, by virtues of formerly research fruits and data of the 976 firms from Q4 2003 to Q3 2007.This thesis did an empirical analysis on relationship between ownership structure and stock liquidity in china listed firms, in order to make clear how different ownership proportion and shareholder pattern influence stock liquidity. Volume, spread, elasticity are interpreted as variables; the proportions of state-owned shares, institutional holdings, and the fraction of the shares owned by the ten largest shareholders are interpreted as the explanatory variables; virtual variables to the size of the companies, share price, book to market, profit volatility are interpreted as control variables. Descriptive statistics, correlation and panel data regression analysis are used as method in the paper.through examining the link between the liquidity of a firm's stock and its ownership structure, Empirical result indicated that, the liquidity-ownership relation is mostly driven by institutional ownership rather than insider ownership. The ratio of institutional holdings is positive correlated with stock liquidity; the ratio of state-owned shares is negative correlated with the stock liquidity and the stock concentration is negative correlated with the stock liquidity. In addition, stock liquidity can also retroact the institutional holdings. Institutional holdings tend to decrease with the spread and increase with the volume and the elasticity; The changing of the ownership structure also provide a well explanation to the trading activity hypothesis and the adverse selection hypothesis.Based on these conclusions, we have some policy recommendations. We also point out the shortages of this paper to be deeply researched in other papers.