The Empirical Research About Concentration Ratio Of Shares,Investor Protection And Corporate Performance

In Chinese security market, investors are usually infringed, especially small and medium-sized investors. In order to protect the profit of the small and medium-sized investors in security market, our country has issued a series of legal provisions for protecting them. With the deepening of legal efforts, the interests of the small and medium-sized investors have not been improved obviously. One of the important reasons is that the protection for the rights of investors is not only influenced by external environment, but also vitally linked with the governance of the quoted companies. The source of the infringed profits for investors is the agency problem which is formed by the separation of the ownership and the managerial authority of the modern companies. Small and medium-sized investors can be infringed by the opportunism of the management. Meanwhile, they’re also be infringed by the major shareholders who use their right of control. However, corporate governance can be regarded as the protection which can keep the interests of the external investor far from suffering the infringement of the internal governors. Ownership concentration is one of the main components for the governance mechanism of a company. It affects not only the protection of investors, but also the corporate performance. There are nonstop arguments in academia. The arguments are about the affection of the corporate performance and the ownership concentration and the relationship between the protection of investors and the ownership concentration. Scholars did a lot of research, but they didn’t draw a unified conclusion.From the perspective of corporate life cycle, we put concentration ratio of shares, investor protection and corporate performance in the identical frame system in order to explain this academic research is not uniform. In this paper, we use empirical analysis of the main and theoretical analysis supplemented by a comprehensive research method. A brief description of the background on research purposes in the article, First, start with the concept of investor protection, contract theory and law from the perspective of investor protection on the two theories were reviewed, and by the principal-agent theory are briefly reviewed. Then we reviewed the corporate life cycle theory and ultimately determine the use of the combination of net cash flow from investing activities and financing activities as criteria for the classification of corporate life cycle, identification of the enterprise in the growth stage and maturity characteristics, define the enterprise features in the growth stage and maturity. This paper argues that business enterprises in the growth stage is characterized by a three-year net cash flow from investing activities is negative and the net cash flow from financing activities and is positive. If the three-year net cash flow from investing activities is positive and the net cash flow and from financing activities is negative, the paper argues that in a mature business. Then, we start to design this study; this paper defines from the level of investor protection micro level, use corporate funds Occupied by large shareholder and quality of information disclosure to measure the level of investor protection micro level. On this basis, draw on LLSV’s research methods calculated the company’s investor protection factor. Discussing what impact on business performance from the ownership concentration, and investor protection, Ownership con-cent ration on the impact of investor protection proposed hypothesis of this study.This paper selected the2007-2009data from listed companies in Chinese manufacturing for the study sample. Finally, we constructed different multiple regression equation for the relevance between corporate between concentration ratio of shares, investor protection and corporate performance during enterprise in the growth stage and mature stage. The empirical results show that:(1) Concentration ratio of shares in the growth stage of the enterprises is higher than the mature stage of the enterprises.(2)The rate of corporate funds Occupied by large shareholder in the growth stage of the business is lower than in mature capital enterprises and the quality of information disclosure is higher than in the mature business, which also shows the level of investor protection in growing firms than mature firms.(3)In growth of enterprises, the relevance between the level of investor protection and corporate performance is not obvious. In maturity of enterprises Investor protection is remarkably positive-related to corporate Performance.(4) In the growth of enterprises, concentration ratio of shares and firm performance was positively correlated. In the maturity of the enterprises, concentration ratio of shares and firm performance was negatively correlated.(5) In growth of enterprises, the relevance between investor protection and concentration ratio of shares is not obvious. In maturity of enterprises, investor protection is significantly positive-related to concentration ratio of shares.