| Since Jensen & Meckling published "Theory of the Firm:Management Behavior, Agency Costs and Ownership Structure" in 1976, many scholars home and abroad have studied on the relationship between ownership structure and corporate performance. Foreign scholars focus on the impact of ownership concentration and internal shareholding on corporate performance. Domestic scholars focus on ownership concentration, equity property and equity liquidity. However, due to the background, sample, measurement of different indicators and so on, related literature has not reached to the same conclusion.Ownership structure refers to different shareholders and ratio of various types of shareholders in the company's total share. Ownership structure can be defined in two ways:Qualitatively, it is different shareholders and corresponding nature of shares; Quantitative, it is ownership concentration or dispersion. Ownership structure is the basis of corporate governance structure and an important factor, and affects the company's performance by corporate governance.Corporate performance is a company's management result of asset operation, financial efficiency and capital maintenance and appreciation in a certain operating period. The measurement system of corporate performance includes single indicators and multiple indicators. Return on equity, return on investment, return on total assets, earnings per share, core business assets rate of return, Tobin's Q, DuPont evaluation system, EVA financial management system are commonly used in single law. The multiple system are Wal-score method, analytic hierarchy process (AHP), consolidated balance score cards, etc. whether a single method or the multiple method, there are pros and cons of each.Although there are many studies on ownership structure and corporate performance, academic achievements of impact of ownership structure of listed companies in pharmaceutical industry on corporate performance are less. This paper takes domestic listed companies in pharmaceutical industry as sample and makes empirical studies on the influence of ownership structure of pharmaceutical listed companies in China on corporate performance. Based on above, the paper puts forward the recommendations of optimizing ownership structure and improving corporate performance. The paper consists of six parts:The first part is introduction. This part mainly discusses the background, significances, topics ideas, research framework and expected contribution of the paper.The second part is literature review. This part collects and summarizes theoretical and empirical research on ownership structure and corporate performance, then put forward own the author's own review. The foreign literatures are about ownership concentration and equity property; the domestic literatures are discussed in two different stages:segregation of share capital and share capital segregation reform.The third part is theoretical analysis of ownership structure. This part introduces the definitions and indicators of ownership structure and corporate performance, and describes theoretical basis including separation of ownership theory, principal agent theory and property theory.The fourth part is characteristic of ownership structure and corporate performance of China'.s listed companies in pharmaceutical industry. Firstly, by analyzing performance of pharmaceutical industry, the paper summarizes characteristic of pharmaceutical industry in China:①The pharmaceutical manufacturing has resistance to economic development cycle;②The pharmaceutical manufacturing is deeply influenced by policy;③The pharmaceutical manufacturing is high technology, high investment, high risk, high value-added industry;④The overall concentration of pharmaceutical manufacturing is low;⑤The demand of pharmaceutical products and services are relatively stable, and has resistance to defense. Secondly, by analyzing historical data, the paper introduces the characteristic of ownership structure of pharmaceutical industry in China:①The lower proportion of national share holdings;②Higher ownership concentration and uneven stock distribution;③In the era of post-share capital segregation reform to the whole circulation times. Thirdly, according to "central enterprise performance evolution implementation details" announced in September 2006 by SASAC, the paper selects 14 indicators to evaluate pharmaceutical industry's profitability conditions, asset quality, debt risk profile, business growth and market conditions. Results show that operating performance of China's pharmaceutical industry has increased.The fifth part is empirical study in the influence of ownership structure on corporate performance. This part includes the following ones:Firstly, sample selection and data source are presented:the paper takes pharmaceutical manufacturing industry in Shanghai and Shenzhen A share listed companies as samples and selects annual report of 2007 to 2009 as data.Secondly, variables are presented:the paper chooses return of assets (ROA) and earnings per share (EPS) as dependent variables to evaluate corporate performance; ownership structure as explanatory variables. The paper chooses ownership concentration, equity property and equity liquidity to indicate ownership structure. Ownership concentration is indicated by ratio of the largest shareholder and the top ten shareholders; equity property is indicated by ratio of the institutional investors; equity liquidity is indicated by ratio of tradable shares. Control variables are company's growth, capital structure and company size.Thirdly, four hypotheses are proposed:hypothesis 1, ratio of the largest shareholder and corporate performance are negatively correlated; hypothesis 2, ratio of the top ten shareholders and corporate performance are positively correlated; hypothesis 3, ratio of institutional investors and corporate performance are positively correlated; hypothesis 4, ratio of tradable shares and corporate performance are positively correlated.Fourthly, models are built and annual aggregate sample regression and general sample regression by statistical software SPSS 17.0 are made. Regression analysis includes descriptive statistical test, correlation analysis of independent variables and multiple linear regression analysis.The sixth part is main conclusion and recommendation. Based on above analysis, the paper comes to conclusion:①Ownership concentration and corporate performance are correlated; Ratio of the largest shareholder and corporate performance are not significantly correlated; ratio of the top ten shareholders and corporate performance of pharmaceutical listed companies are linearly correlated.②Ratio of institutional investors and corporate performance of pharmaceutical listed companies are significantly and positively correlated.③Ratio of tradable shares and corporate performance of pharmaceutical listed companies are not significantly correlated.④Company size and growth and corporate performance of pharmaceutical listed companies are positively correlated.⑤Debt ratio and corporate performance of pharmaceutical listed companies are negatively correlated.Based on the theoretical and empirical studies, the paper puts forward recommendations to optimize ownership structure and improves corporate performance of pharmaceutical listed companies in China:①Optimize ownership structure:maintain proper ownership concentration and introduce institutional investors. Excessive dispersion and excessive concentration of ownership structure are not good to improve corporate performance. In order to reduce the agency and monitoring costs and increase efficiency, listed companies should maintain appropriate degree of ownership structure and form power balanced ownership structure. So that share holdings of institutional investors can make contribution to companies'performance. To speed up the development of institutional investors and give full play to improve governance of listed companies and corporate performance in China, we should learn from experience of development of foreign capital market and institutional investors. Combined with characteristic of domestic capital market, we should build a good platform for the improvement of institutional investors.②Focus on company scale. Pharmaceutical industry is a high-tech, high-investment, high-risk and high add-value industry. Only a modest expansion of scale can reduce production cost and enhance research capacity.③Improve relevant system and steadily promote circulation. Share capital segregation reform is a long progress, which requires improvement of relevant system and formation of right protection mechanisms for middle and minority shareholders and power-balanced corporate governance.④Actively promote medical policy. Pharmaceutical manufacturing is influenced by industry policy. In recent years, a series of medical policy is adopted to support pharmaceutical industry, which brings good news listed companies in the industry. However, implementation of policy will not happen overnight, thus it will need support and assistance of all parties to implement in the future.The contribution of this paper:①There are a lot of studies domestic and abroad on the relationship between ownership structure and corporate performance, a few of which is about pharmaceutical listed companies. Since pharmaceutical industry is beneficial to national welfare and people's livelihood, the paper does empirical research in the influence of ownership structure on corporate performance in China's pharmaceutical listed companies. Then based on the research, the paper proposes policy and recommendation to improve ownership structure and performance of the industry.②Most of present studies on the influence of institutional investors'shareholding on corporate performance are theoretical, and only a few of studies are empirical. The existing empirical studies mostly choose funds to indicate institutional investors, which is not comprehensive. This paper chooses all institutional investors in the top ten shareholders as the research object.③Based on the theoretical and empirical studies, the paper puts forward recommendations to optimize ownership structure and improves corporate performance of pharmaceutical listed companies in China. |
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