Research On Ownership Structure And Corporate Performance In Post Non-tradable Share Reform Era

Equity structure, as the base of property, affects the company’s internal governancemechanisms by determining the controlling system, and finally influences overall performance ofthe whole company. According to the special system of split share structure in China’s securitiesmarket, listed companies’share was artificially divided into tradable and non-tradable shares. Thisdesign of system seriously affected the capital market to play its basic functions and at last forcedlisted companies to establish their governance system in this distorted the system environment. Thisirrational equity structure must inevitably affect the performance of listed companies in China.In April 2005, the Chinese Securities Supervisory Association announced that the pilot work,which intended to solve the split share structure question, officially started, and largely completedin 2006. Since then, China has entered in post non-tradable share reform era. At that time, scholarshave made some researches to varying degrees, but most of them analysis the comprehensive data,instead of small sample data in industry. This article attempts to introduce the market competitioninto the empirical analysis, and intends to answer the questions about the ownership structure andcorporate performance, besides, try to put forward some useful suggestions to optimize the equitystructure of listed companies in China.Firstly, we reviewed and analyzed the paper on the relationship between ownership structureand corporate performance, then described the relevant theories.Secondly, we explained the split share structure reform in China and described the changes onthe listed companies’ownership structure of before and after t the split share structure reform.Thirdly, the paper finally selected 56 public utilities industry, 56 textile and clothing industryand 60 machinery manufacturing, and totally 172 listed companies experience as a researchsample. We established the indicators of the explanatory variables, the explanatory variables andcontrol variables, then the hypothesis and the analysis model was establishment. After that wemade the descriptive statistical analysis in two levels, one of is the industry sample, the other is allsamples. In the end, the hypothesis between the ownership structure (shareholding structure,ownership concentration and equity balance degree) and the company performance hypothesiswere tested. The results show that: the proportion of the state-owned shares and legal personshares has a negative impact on the company’s performance, but the results in the utility industry isnot significant, while the significant roles of the proportion of tradable shares to the company’sperformance is not found neither in the industry samples nor in the all samples; the relationshipbetween the ownership concentration and firm performance are significant U-shaped, but there are differences among the industries, which we think may be caused by the product of competitionstrengthens; then we found the relationship between the degree of equity and corporateperformance .Finally, according to the theoretical analysis and empirical results, we give some reasonableproposals on how to optimize our ownership structure of listed companies to improve corporateperformance.