The Influence Of Foreign Shareholdings On Corporate Governance Structure And Corporate Performance In Listed Companies

Nowadays China is one of the world's top capital importers and is attracting more amounts of foreign investment, at the same time, the foreign shareholdings is playing an important role in our economy. Objectively, foreign shareholders may influence listed company's strategic objectives, business model, and capital structure etc. They may improve the company's competitiveness, but also may lay the company heavy burdens. Furthermore, along with policies of reform and opening-up in capital market, we can expect to see more foreign investment on our capital market in the future. Also, research on the foreign shareholding is becoming more significant and meaningful.Most foreign researches on the foreign shareholdings of emerging economies find that it can improve the corporate performance, but some few discover that they are irrelative or negative. The researches about our country focus on the situation that when foreigners are dominant stockholder, how foreigners affect the corporate performance. There are some studies are about QFII, mostly on the capital market, few of them are about corporate governance.This paper is a research on the relationship between foreign shareholdings and both corporate governance structure and corporate performance, which is based on our country's public companies. In this study, I want to find out the answers of the following questions:do foreign shareholdings affect the corporate governance structure, if they do affect, how and on what aspect; do foreign shareholdings increase the company's performance?After theoretical analysis and empirical research, I reach concludes as fellows. Foreign investors prefer to spend money on manufacturing industry. The foreign shareholdings can expand the Board size, and encourage the situation of the chairman of the board also work as CEO, have no effects on the percentage of independent directors of the board and the meeting frequency. The Tobin's Q is negative to the foreign shareholders' equity stake and board size, and irrelative to the situation of the chairman of the board also work as CEO.Based on the empirical result, I put forward some proposals, the introduction of foreign strategic investors should be more careful, the company itself instead government should choose whether the chairman of the board and CEO should be appointed to the same person, encourage institutional investor participate more in corporate governance.This article is divided into the following five parts:ChapterⅠ, I introduce the research background, framework and basic ideas.ChapterⅡ, I list relevant literatures at home and abroad. On the base of relevant literatures, I find that prior research on the foreign shareholdings mostly focused on corporate features, such as corporate governance structure, capital structure etc. Most of these papers are from the outside agency views; few of them combined the corporate governance structure and the governance performance to study the influence of foreign shareholdings. So this paper combined the two factors to study the impact of foreign shareholdings.ChapterⅢis about system background and theory analysis. This chapter consists of two parts:first, the development of foreign shareholdings in china. Second, on the basis of theoretical analysis, I develop the hypothesis for empirical research.In chapterⅣandⅤ, I introduce the definition of some variables, the evaluation standard and the Data Model Design, then is the description of empirical research. The data is from Csmar data base. The empirical result shows that the governance performance is negatively related to the foreign shareholding, board size and the chairman of the board also work as CEO.ChapterⅥ, based on the empirical result, I put forward some proposals, such as developing institutional investors, being more careful when choosing the foreign investors, and letting the company itself decide whether the CEO and the chairman of the board is the same or not.The findings of this study uncovered the relationship between foreign shareholding and corporate performance in China. Academically, this paper offers an understanding of modern corporate governance system in foreign shareholding's aspect, and level of its adaptability. In practice, this paper can provide a suggestion on how to choose foreign stakeholders and on what extent to introduce them to the company.