Empirical Analysis On The Relation Of Managerial Ownership And Corporate Performance Based On Full Circulation

The managerial stock ownership is a method of corporate governments, in which, the shareholders give up some claim rights to the residual firm’s value in order to combine their wealth with that of the managers. It leads to share profits and risks between managers and shareholders. Meanwhile, the managerial stock ownership stimulates managers to do their best to achieve the shareholders’wealth, and greatly reduces the agent costs. For listed companies, the stock prices can reflect the corporate performances. Therefore, the managers have incentive to improve the corporate’ performance for some rewards. By the way, it realizes the integration between shareholders and managers, and managers will carry strategies to realize the maximal shareholders’ wealth.The managerial stock ownership originates from the shareholding reform of the state-owned enterprise in China, which is called shortly for SOE later. The initial form is the stock holding of inner employees, then becomes the takeover of the management and shareholder’s right drive. The primitive goal of building the stock market is to help SOE far from distresses. However, there are some parts of stocks can’t exchange in the public market at the beginning. It is the reason that the government is afraid of losing the control rights to SOE, due to the drain of state-owned properties. Hence, it appears exchange-traded and non-exchange-traded stocks for the same company. The phenomenon of sub-owned shares induces to the different prices for the same stock, and twists the pricing mechanism.Up to now, there is still not the consensus about relationship between the managerial stock ownership and the corporate performance. The paper intend to give some advises which help the mechanism carry in effect. Based on the listed companies from 2006 to 2010 in our country, designs a linear and a non-linear model to analyze the relations between the managerial stock ownership and corporate performance. This article find:the relation between managerial stock ownership and corporate performance turn out to be both a linear and a non-linear one. These two model shave the same explanation and force a stability, due to the low level of managerial stock ownership in our country.