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On The Reduction And Circulation Of State-owned Shares

Posted on:2002-02-07Degree:MasterType:Thesis
Country:ChinaCandidate:C L ZhongFull Text:PDF
GTID:2206360032454845Subject:Finance
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According to the Party Central Committee's policy, the state-owned economies will be strategically adjusted. In some vital industries and areas, the state-owned economy will keep predominant share, and in other industries, the state-owned economy will find a smooth way to quit. Listed companies are an important part of the state-owned economy, so the reduction of state-owned stock is set out on the schedule. Without well-designed plan, sudden release of the large volume of the state-owned stock will cause a strong shock to stock market. Therefore how to reduce state-owned stocks without hurting the stability of stock market becomes an urgent problem.This dissertation is divided into three sections. Section 1 describes the background of the state-owned stock and its historical contribution to the establishment of our stock market. But its drawbacks hampered development of the market. So it's necessary to cut down state-owned stocks. Section 2 uses five indicators to evaluate the equity structure of listed companies and use game theory to explain the results of the high proportion of state-owned stocks. Section 3 analyzes the obstacles in circulation of state-owned stocks and evaluates some plans, then presents a new plan and some policy options.In introduction there is a brief review of the motives, policy background and some experiments on reduction of state-owned stocks.Section 1 is divided into three chapters. Chapter 1 describes the causes of state-owned stocks, which are an unique characteristic of Chinese stock market. In late 1980's banking system cannot provide sufficient finance and in this circumstance Chinese economy needed another financing channel, direct finance. But traditional ideologies consider stock market as a basic feature of capitalist economy. In order to sustain the key role of public ownership, state-owned shares should take predominant proportion in total issue and could not be circulated in market. In fact this is a compromise of different interest groups and avoid troubles on ideology. At that time there was no social security system, enterprises must provide their employees pensions and other welfares. If these enterprises had been privatized, provision of pension and other welfares was a serious problem. Chapter 2 examines drawbacks of state-owned stocks. First, in most conditions mergers and acquisitions of listed companies cannot be accomplished in stock market. It is difficult to fulfill a tender offer in secondary market. Government's interventions often lead to market distortions. Second, shareholders of state ownership use related transactions to manipulate profits. Third both banks and listed companies are controlled by state ownership, so banks have little motives to supervise their creditors. Chapter 3 uses Marxists theories to explain reduction and circulation of state-owned stocks are preconditions of preservation and increment of state-owned capitals.Section 2 is divided into three chapters. Chapter 1 introduces five indicators to evaluate the equity structure of listed companies. They respectively are: 1.the quotient of state-owned stock proportion. In short, it is called proportion g. It presents the proportion of the state-owned stock of total equities in a listed company. The higher g is, the more invention would be caused from the local government. 2. The concentration ratio CRn. CRn shows the stock Concentration Ratio of several shareholders in one listed company. It would be better if CRn were stable in a certain level. If it were too high, there would be problems about the abusement of the dominant shareholder. But if it is too low, the stock price might be influenced easily by the speculation actions in stock market. The third indicator Herfindahl index is similar with CRn. Index Z is the equity proportion between the first and the second shareholder in a listed company. It would be nice if the ratio is kept between 1.5-2 or there might be abusement of the first shareholder. Pf represents the ratio of the circulated equity of the company's total amou...
Keywords/Search Tags:state-owned stock reduction negotiate corporate governance resource allocation stable
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