An Empirical Study On The Relationship Between Ownership Structure And Corporate Performance

In recent years, the amount and total market capitalization of China’s listed companies develop rapidly. Listed companies have become an important part of our national economy and the backbone of social development. Consequently, its operating performance attracts more and more attention. Being the property right foundation of corporate governance system, ownership structure is the concentrated reflection of stakeholders’rights and responsibilities in a company. Ownership structure greatly influences or even determines the allocation of corporate control and operating mode of governance mechanism, which in turn influence corporate performance. In this situation, strengthening the research of listed companied is not only helpful for their rational understanding and evaluation, but is essential to their own operation and development.First of all, We introduce the research background and significance, give the basic concepts of "ownership structure, corporate performance and endogeneity ",describe research methods. Secondly, with the standard of taking into account endogeneity, we detail the latest research trends of ownership structure and firm performance at home and abroad, compare domestic research with foreign one. The literature review shows that ownership structure is endogenous which is confirmed by more and more evidence in both abroad and domestic studies and if this is not considered in empirical research, we may draw biased conclusions. Thirdly, we analyze the theoretical basis on studying ownership structure—principal—agent theory and empirical research methods concerning the endogeneity of ownership structure. Then basing on the above information, we propose appropriate hypotheses and verify them using the method of OLS and2SLS. It reaches a conclusion:ownership structure is endogenous, not exogenous. The relationship between ownership structure and corporate performance is interactive. Besides ownership structure influence corporate performance, the latter has a strong feedback on the former. Moreover the ownership structure influences the corporate performance significantly and it is an "inverted U" shape between them in China’s listed companies. When the shareholding ratio of top management and the largest stockholder is20.5486%and37.5435%respectively, the corporate performance reaches its maximum. The independent director has not a positive influence on the corporate performance. At last, we put forward countermeasures and policy advices based on the empirical results. Because ownership structure is an endogenous, the adjustment of ownership structure is market-oriented and the policy in this process is secondary. Also, we should increase the shareholding ratio of top management and the largest shareholders, choose different time when improving corporate governance, emphasizes on independent director system.