Study On The Impacts Of Ownership Concentration And Ownership Balance On The Performance Of SME Board Listed Companies

Since its official establishment and launch on Shenzhen Stock Exchange in2004. SME board has developed into an indispensable part of China’s multilayer capital market system. Up to December31,2012, the total number of SME Board Listed Companies has reached701with the total market value of2,880.4billion. The rapid development of SME board has brought forward new demands as well as new possibility for China’s corporate governance research. Different from the main board market, SME board listed companies are mainly private enterprises, among which family firms hold the dominant position. Taking the structure of shareholding ratio as a starting point, the thesis studies the influences of ownership concentration and ownership balance on the performance of SME board listed companies based on the characteristics of their ownership structure.This thesis adopts a logic method of theoretic basis analysis---athematical model establishment---mpirical analysis test, and studies the influences of ownership concentration and ownership balance on the performance of SME board listed companies from the above three dimension. Firstly in the part of theoretic basis analysis, the thesis answers the questions why ownership concentration and ownership balance can benefit the improvement of companies’performance and how they achieve the improvement through corporate governance mechanism, based on double principal-agent theory and corporate governance theory. Secondly in the part of mathematical model establishment, the thesis proposes research hypothesis combined with the characteristics of ownership structure of SME board listed companies. By establishing the utility function of controlling shareholders and using the derivation process of first-best expropriation level of them, the thesis comes to a conclusion that ownership concentration and ownership balance can benefit the improvement of companies’performance. Lastly, taking the data of three years’ annual financial performance and ownership structure of SME board listed companies from2009to2011as research objective, the thesis collects261listed companies as samples and makes regression analysis. ROA. CROA. ROE as explained variable and Herfindahl index, Z index as explaining variable. The regression analysis verifies the hypothesis that ownership concentration and ownership balance has a positive effect on the improvement of companies’performance.The thesis draws the following two conclusions through the above analysis:(1) SME board listed companies can improve corporate performance by appropriately increasing the degree of ownership concentration;(2) SME board listed companies can improve corporate performance by appropriately increase other big shareholders’ checks and balances of the controlling shareholders, i.e. ownership concentration and checks and balances between big shareholders in ownership structure of SME board listed companies can help improve corporate performance. According to the above conclusions, three suggestions are provided:(1) appropriately improve the degree of ownership concentration of SME board listed companies and improve the proportion of major shareholdings;(2) increase other big shareholders’checks and balances of the controlling shareholders in SME board listed companies, and improve the mechanism of checks and balances of corporate governance;(3) strengthen the construction of external governance mechanism to effectively protect the rights and interests of minority shareholders.