Ownership Structure And Firm Value: An Empirical Study Of Listed Family Firms In China

Family-controlled listed firms have become an important power in Chinese economy. However, there are also some disadvantages and contradictions in their governance mechanism, which has been paid much attentions. The research on the relationship between family ownership structure and firm value and improving the corporate governance is of great value to these companies.Based on defining the relevant concepts and analyzing the governance structure characteristics of the family listed companies in China, we choose 312 companies which had been listed before the end of 2008 to do an empirical analysis. Then, we separate the ownership structure into cash flow rights, ownership concentration, the separation factor of cash flow rights and control rights, listing model and positions of CEO and chairman and build the linear model between each ownership structure variables and firm value. After doing so, we want to see the correlation and regression relationship between them. At last, we establish a stability test using ROA as the agent variable. The research finds that:1,The cash flow rights of listed family companies in domestic presents the converse U-shaped relationship with the firm value, the graph at the inflection point in 58.02%, that is, when 0 <FCF <58.02%, the higher the family cash flow right, the higher the firm value. When FCF> 58.02%, the higher the family cash flow rights, the smaller the firm value. It means that family control has two effects, one is interest collaborating before super-controlled, another is interest entrenchment after super-controlled.2,Ownership Concentration presents negative relationship with firm value. Indicating that there are "family control" and "Family shareholders and large external shareholder join together to entrench the interests of small shareholders," in listed family companies, which enhanced the controlling shareholder's tunneling and decreased the firm value.3,The deviation degree of family control rights and cash flow rights is negatively related with the firm value. This declares that the separation of cash flow rights and control rights will decrease the firm value and produce a certain degree of "barrier effect". The bigger the degree of deviation is, the more the "barrier effect" are.4,The listing models of family enterprise are not significantly influent the firm value. That's to say, the firm values have no significant differences between in listed companies controlled by family directly and listed by indirect ways such as through shell or MBO.5,The condition that board chairman deputizes CEO in the firm will negatively impact the firm value. So, positions of CEO and chairman taken by one person will lead to a highly concentrated decision-making mechanism, an ineffective power balances and increase the risk of corporate decision-making, which will decrease the firm performance.The key measures to improve the ownership structure of listed family companies should be in two ways. First, restrict the control rights of the actual controller and decrease the proportion of the family actual holding to about 50%. Second, strengthen in supervising the listed companies which separate the control rights and cash flow rights, improve the information transmission mechanism of family companies and regularly publish the ownership structure map of the family.