Research On Nature Of Ownership, Asset Injection And Performance Of Listed Companies

Performance of listed companies has become a hot topic of research among the theoretical circle and the practical circle in recent years. Many academics have studied deeply in this topic from various perspectives of factors which can affect corporate performance. The domestic capital market has entered a period of entire circulation after the shareholder structure reform and asset injection by large shareholders has become a new hot point. With asset injection into listed companies controlled by large shareholders, performance of listed companies is deeply affected. Large shareholders would not only inject assets with high quality, but also inject assets with low quality into listed companies, for the purpose of propping and tunneling respectively. Therefore, researches on the favorable or adverse effects on performance of listed companies with asset injection are significant for the normalization of asset injection and the stabilization of corporate performance.In our country, special institutional background and political environment exist. Domestic listed companies can be divided into two types, which are state-holding and private-holding listed companied respectively, according to types of ownership. Generally considering, state-owned property rights are absolutely dominant in state-holding limited companies and therefore a strong national will is embodied in companies’operating activities. Not only economic but also political objectives should be pursued. In fact, compared with private-holding listed companies, state-holding listed companies are more easily intervened by the government. What’s more, in most state-holding listed companies, the government is the largest controlling shareholders, so a’government helping hand’and a’government grabbing hand’may both exist at the same time. The government’s motivations of propping and tunneling would be more obvious. Therefore, in listed companies with different types of ownership, such as state-holding and private-holding listed companies, what are the motivations and the economic consequences of asset injection by large shareholders respectively? Which has a more significant effect on corporate performance? What can the security supervision department do in order to improve the efficiency of classified regulations? Can policies of regulation and governance be adjusted according to different nature of ownership? Those issues are worth studying and exploring. Current researches focus more on economic consequences of asset injection, but no research has studied the motivations and the economic consequences of asset injection based on nature of corporate ownership. This thesis attempts to find out an inherent relationship between nature of ownership, asset injection and performance of listed companies and help understand agency problems in domestic listed companies due to different structures of ownership. In addition, we hope it can expand and deepen some related studies on corporate governance and complete theoretical explanations of asset injection.Based on literature review of domestic and foreign researches, this thesis makes a theoretical analysis of the relationship between asset injection by large shareholders and performance of domestic listed companies first. Several motivations of asset injection by large shareholders are summarized according to some fundamental theories, such as the agency theory, the propping and tunneling theory and the related party transaction theory. Second we measure the performance of listed companies with two indicators, business performance and shareholder wealth and then four hypotheses are suggested according to the theoretical analysis. Third, the empirical analysis is conducted. Based on definitions of asset injection by large shareholders, we select A-stock domestic listed companies among which related asset injections are conducted from2006to2007as our primary sample. And after a data processing, the data we needed in this research is achieved. Then ROE and CAR are selected as dependent variables, which represent business performance and shareholder wealth respectively. And the size of injection is used as an independent variable, while the size of companies, the share percentage of the largest shareholders, the growth of companies, the leverage and the nature of ownership are selected as control variables. A regression model is constructed with those variables and after a series of empirical analysis, conclusions are obtained. It’s stated that in a short term, asset injection has a marked favorable impact on performance of listed companies, but in a long term, this impact is not obvious. In addition, no matter how long the period is, asset injection in private-holding listed companies has a much better impact on corporate performance than that in state-holding listed companies. Finally, based on results through the theoretical and the empirical analysis, some suggestions are made, such as encouraging asset injection with a high quality, protecting small shareholders’benefits with a sound law system, completing the governance institution and normalizing the government behavior.The thesis is divided into five parts. Part I is an introduction, in which research background, significance, clues, methods and a framework are introduced. Part II is a literature review of related domestic and foreign researches about asset injection and ownership of listed companies, and some defects or problems among current researches are also presented. Part Ⅲ is a theoretical analysis of the relationship between asset injection by large shareholders and performance of listed companies. In this part, motivations of asset injection are induced and hypotheses are suggested from the perspectives of distinguishing and not distinguishing corporate ownership. Part IV is an empirical analysis of the relationship between asset injection by large shareholders and performance of listed companies. We carry on a comprehensive analysis of the selected sample, on the basis of our research design. Part Ⅴ summarizes research conclusions and suggestions according to the theoretical and empirical analysis above. Limitations in this thesis are also pointed out.