Research On Impact Of Ownership Structure On Financial Risk

In recent years, with the reform of tradable and a series of other capital market system, Chinese stock market have made a continuous development, the number of listed companies became more and more, and the market value has also increased. However, a large number of listed companies have run into financial difficulties after a brilliant post-marketing experience, due to the excessive pursuit of business performance while ignoring the concern of the financial risk. Therefore, we choose to study the financial risks of the listed companies. There are many reasons for the causes of financial risk, both internal factors and external factors. The internal factors include decision-making mistakes on investment and financing, manager’s behavior of moral hazard and adverse selection under agency, and the tunnel of the company’s assets by controlling shareholders. After analysis of the phenomenon, we found that the ownership structure can be considered as the deep-seated irrational reason. Therefore, this paper aims to explore the impact of the ownership structure on financial risk.This article selects manufacturing listed companies on A-share market for the study, and conducts research around the following ideas:First, introduce the background, significance, research methods and the main framework and possible innovations in this article; Second, review and comment on the documents of ownership structure, financial risk and the relationship between them. Followed put forward this article’s hypothesis after analysis of the theory of ownership structure and financial risk, and then make the empirical analysis of the relationship between ownership structure and financial risk from angle of the liquidity structure of equity, equity-type, ownership concentration and equity balance degree, and finally make the conclusions and propose some recommendations.Empirical results of this study showed that:the impact of ownership concentration on financial risk is the most significant, it implies that the higher ownership concentration, the lower the level of financial risks; followed is equity balance degree, there are significant positive correlation between equity balance degree and financial risk, it implies that the higher the equity balance degree, the greater the financial risk; liquidity structure and the nature of shareholding have an impact on financial risk, but the impact of the effects are not significant. For the above conclusion, we propose the following suggestions:increase the proportion of outstanding shares and improve the different types of shareholders’ rights at the same time; make a moderate reduction of state-owned shares; make a moderate introduction of institutional investors, and regulate the development of them; maintain a certain degree of ownership concentration, improve equity incentive mechanisms; improve the system construction of securities market and strengthen the supervision.