Shareholding Structure And Corporate Performance Correlation Analysis

The share-right composition of a listed company determines the power structure and goperational efficiency of the company. The Thesis proceeds from the specific share-right composition of China's listed companies to render an analysis over its influence upon the company's managerial effect. It is the author's view that the profit return of a company comes from the efficiency of the company's management,while the power for the company's management comes from the company's share-right composition and the compulsory force of modern laws. In light of the contract theory,a component of the enterprise theory,the said legal compulsion could be regarded as a contract. The focus of the Thesis lies in an elaboration of the influences exerted upon a listed company's profit return by the monopolist position the state-owned shares occupy,by the degree to which share-right is concentrated,and by the division of non-negotiable shares and negotiable shares,as well as of the positive promotion to the company's profit return by the system of executives buying-back shares and employees' share-ownership. Based on theoretical analysis and case study,the Thesis proposes some measures for optimizing the share-right composition and enhancing the profit return of the listed companies. The conclusion can be summed up as follows:(1) Owing to the absence of real trustor,the unduly long,hence low,efficiency of the agency chain,state-owned shares are prone to being controlled by insiders and to the problem of share-holders' interests being embezzled by insiders. On the other hand,the corporate shares are considerably better than state-owned shares in terms of the efficiency of company management. Therefore,the key to optimizing the share-right composition lies in how to improve the management system of state-owned assets. The Thesis puts forth some specific proposals concerning this issue. (2) With the share-right severance between non-negotiable shares and negotiable shares coexisting in the market,the holders of the two different shares cherish different objective functions. The objective function for the holders of non-negotiable shares is to increase the net asset per share,while that of the negotiable share holders is toboost the share price on the secondary market. This difference in objective function leads to the behavioral difference among the shareholders,and the conflicting behaviors result in loss of efficiency. The analysis of the Thesis points to the conclusion that the inevitable option is to pull the non-negotiable shares onto the same track of the negotiable shares. The Thesis contributes some particular measures with a view to render the non-negotiable shares negotiable. (3) The share-right composition of China's listed companies is an extremely concentrated type,which inevitably leads to an absolute control by major shareholders. The absence of competition for the control of share-rights accounts for the weakening of efficiency on the part of the company. It is the author's view that a relatively satisfactory share-right composition should be one that is at once concentrated and relatively dispersed. That is,controlling shareholders coexist with secondary major shareholders,and between them there is the competition to strive for the control. Such a competition is conducive to improvement of the company's efficiency. (4) Insiders' share ownership consists of shares held by employees and by executives,respectively. Individual employees hold very tiny portions of shares and,therefore,the individual shareholders are scattered with negligible effect on the company's management. However,shares held by executives will help enhance the company's management efficiency. The Thesis makes an analysis on such problems as,under the practical circumstances in China,in the process of buying-back of shares by the executives there is the possibility of unfair purchase of shares at very low prices under the control of insiders,of unfair trade which will lead to loss of state-owned assets,of high-proportion or even predatory profit d...