Empirical Analysis Of The Ownership Structure Of Listed Companies In China And Company Performance

The relationship between ownership structure and corporate performance has been the subject of intense research in corporate governance. Based on the annual report data of 1181 listed companies over the period 2002 through 2004, we investigate the relationship between ownership structure and corporate performance. Results show:1. Corporate performance is affected by the character of the largest shareholder significantly. The largest shareholders of the listed companies, according to their ownerships, are divided into 5 categories: state-owned shares, shares of the legal representatives of state -owned companies, shares of the legal representatives of non-stated-owned companies, foreign shares and shares of natural persons. The companies with state or SOEs as the largest shareholder perform better than the others.2. Board size and whether CEO separates from chairman of directors will affect the relationship between corporate performance and character of the largest shareholder. Companies with state or SOEs as the largest shareholder have more directors and high proportion of separation of the two positions, which mean better performance.3. The proportion of shares owned by different kind of shareholders affects corporate performance significantly. Proportion of shares owned by state or SOEs and by non-trade shareholders has positive relation to performance.4. Ownership concentration has significant effect on corporate performance. The fraction of shares owned by the largest shareholder and by the five largest shareholdings has faint "inverse U" relation to corporate performance, while the fraction of shares of the three largest shareholdings has linear relation to performance.Our findings implies that the ownership concentrating on state or SOEs is not the reason of poor performance, and reform of "shareholding disport" will do little for the promotion of corporate performance.