Study On Nature Of Equity, Power Balance With Shareholder Structure And Corporate Performance Variability

The performance of the company has been subject to the attention of academics, but most of the previous studies focus on the level of performance of the company and neglect another dimension of the enterprise value of company. Corporate performance variability is an important indicator which can not be ignored in the corporate value system. On the one hand, in terms of the company, corporate performance variability can be seen as a "barometer" of the enterprise risk, higher performance variability often means that the greater risk of the company face. On the other hand, in the terns of the company investors, The high-performance volatility represents a higher discount rate and High discount rate will undoubtedly reduce the investor’s investment income. Whether it is related to the interests of the company or the company itself, in addition to concern about the level of corporate performance and concern about the results of the volatility is an inevitable problem.On the other hand, the theorists growing emphasis on equity balances, They found the equity balances can inhibition two types of agency problems which is created by largest shareholder emptied and managers control. Since the equity balance can solve the above two types of agency problems, then can it impact on performance volatility?Combined with China’s national conditions, This article from the angle of the nature of equity, equity balance to explore Relationship Between Nature of Equity, Power Balance with Shareholder Structure and Corporate Performance Variability.This paper is divided into six chapters, The main content of each chapter is as follows:Chapter1ExordiumThis chapter first introduces the generated background of the research of performance volatility and summarizes the lack of previous research, then combined the existing enterprise development condition and the condition of our country to explore the issues. Then combing the ideas and methods in this chapter and list of the full text of six chapters, after making a brief description, using Chart to lays out the structure of the full text figure. So this text understanding more clarity.Chapter2Literature ReviewThis chapter begins with the theory associated with the volatility and the value of the company to do a literature review.Summarize the research of scholars at home and abroad. They concluded consistent, whether it is from the point of view of the cash flow, dividend policy allocation point of view or from the point of view of foreign investment risk analysis, we found greater volatility will smooth returns to investors. Then summarizes the literature Ownership Property and Corporate Performance.And at the same time with the national situation analyzes the performance of the non-state-owned enterprises under the same conditions better than the performance of state-owned enterprises. Again, this chapter summarizes the domestic and foreign equity checks and balances and results of the relationship between literature. To the relationship between these two, conclusions are not consistent. There are three types of main points:One view is that the equity of checks and balances is a double-edged sword, its impact on the performance of the company is the result of the interests of the game; One view is that the equity balances and the company performance is a positive correlation; The remainder is a view that there is no obvious correlation between the equity check balances and company performance. At last This chapter summarizes the the the relationship between the equity balance and the Corporate Performance Variability, and finds it can reduce the volatility of corporate performance.Chapter3Theoretical AnalysisThis chapter firstly introduction the concept of the nature of equity, equity balances and the volatility of the performance. Theoretically pave the way for subsequent empirical research articles and empirical classification. Then made a brief introduction to this chapter and the Topic-related theory.Firstly lists the theoretical basis about nature of Equity, power balance with shareholder structure and corporate performance variability. There are theory of separation of ownership, property rights theory and Principal-agent theory. Then, on the basis of these three theories. Then on the basis of these three theories explain equity operation mechanism of the equity balances and explains three major checks and balances model. There are the trade-off model of agency costs and monitoring costs, Coordination effect with the collusion effect tradeoff model, Interests effective compromise effects model.Chapter4Study DesignAfter a series of theoretical analysis, this chapter begins on the relationship between "equity balances and the transverse volatility of the company performance"," equity balances and the Longitudinal volatility of the company performance"," the nature of equity and volatility of the company performance". The three assumptions have been introduced:The first is in the case of other conditions remain unchanged, equity balances and the transverse volatility of the company performance negative correlation; The second is in the case of other conditions remain unchanged, equity balances and the Longitudinal volatility of the company performance negative correlation; The third is Compared to non-state-owned enterprises, the volatility of the company performance of state-owned enterprises is higher. Next, this chapter introduce explanatory variables, dependent variable and control variables.Chapter5Data Analysis and empirical resultsThis chapter first make descriptive statistics to data which have sorted out. And after excluding extreme and abnormal values, take the data into models to make collinearity and heteroscedasticity test. To be a series of preparatory work is completed, then Empirical test "equity balances and the volatility of the company performance", Study found that the performance of equity balance is higher than non-equity balance, and the variety performance of equity balance is lower than non-equity balance. At the same time,by setting the nature of equity dummy variable, we exam the question that the variety performance of non-state-owned enterprises and state-owned enterprises. The result shows that the variety performance of state-owned enterprises is higher than non-state-owned enterprises. At last, when listing the test results, we also explain the relationship of the variables in models.Chapter6Conclusions and Management recommendationsThrough the theoretical analysis and empirical test, this chapter have the following conclusions:firstly, the company performance of equity balance is higher than non-equity balance; secondly, volatility of the company of equity balance is lower than non-equity balance; thirdly, variety performance of state-owned enterprises is higher than non-state-owned enterprises. And finally, this chapter raise the following Management recommendations:the first is that improving enterprise risk awareness, and enhance enterprise concerns to performance volatility; the second is that in accordance with the conditions of our country, establish moderately concentrated shareholding structure; the third is that push forward the reform of state-owned shares and Improve the corporate governance structure of the state-owned holding enterprises; the forth is that Improve managers market competition mechanism of equity balance company; the fifth is that strengthen market supervision and improve the legal system of the capital markets.The main contributions of this paper are:(1) From research ideas, breaking the tradition that study the equity structure from the level of performance. Choose the variety performance as the basis to analysis equity balance and expand the scope of the study of the company performance.(2) From variable selection, In previous studies only consider the Corporate Performance Variability of power balance with shareholder structure and non-power balance with shareholder structure. Combined with China’s national conditions, research Corporate Performance Variability state-owned enterprises and non-state-owned enterprises. In addition, explanatory variables use of market indicators and accounting indicators at the same time that can better reflect the relationship between the variables.(3) From data selection and research methods, previous similar studies is mainly about time-series data and the sample size is relatively small. In this paper, I choose a large sample data and provide a more dynamic and reliable research information.