The Research On The Relationship Between Concentration Ratios Of Shares And Corporate Valuation

The phenomenon that large shareholder infracts small shareholders is ubiquity. Ownership structure,especially a high centralization of controlling rights in our country,determines agency conflict between big shareholder and medium and small shareholder,which may affect corporate valuation. Based on that,this paper mainly analyses exchange relationship among ownership structure and corporate valuation. In this paper,we put concentration ratios of shares and corporate valuation in the identical frame system,and carry on the analysis.This paper selected data of 2006 Chinese A-share listed companies of reform of non-tradable shares carrying on empirical analysis. The factors hindering the valuation of listed companies are approached from the angle of concentration ratio in the equity structure. In the empirical analysis,we present a statistical description through equity concentration ratio indexes CR1, CR4, and H5, and conduct correlation and regression analyses via CR4 which is the sum of shares of the leading four shareholders,and the corporate Performance indexes. The statistical analysis shows that the most outstanding feature of the equity structure of China's listed companies is that equities are relatively concentrated to the biggest stockholders and highly concentrated to the top four stockholders. The findings indicate:There is a significant positive relationship between ownership concentration and valuation of listed firm. Equity structure's resource allocation on corporate valuation has not achieved optimization.In view of this, this article unified newest Securities Law and Company Law as well as division reform of share ownership,and put forward a series of proposals about investor legal protection,the improvement of ownership structure,and the perfect of corporate governance. At last, basing on the foundation of the result of analysis, we advance several policy suggestions of the optimization of concentration ratio of shares in listed company of china.