An Empirical Study On The Relationship Between Ownership Structure, Cash Holdings And Corporate Value

Based on the separation of ownership and management in the modern joint-stoc k company, two problems in the company governance are introduced in the thesis:the agency problem between the governance and the management and the agency proble m between the substantial shareholders and the minority shareholders. At the same tim e, it is found through the cash holdings statistics, summary and analysis of manufacturing-li sted companies in recent ten years that the average cash holdings of listed companies is 16.6 7%and that after the year of 2008, the company’s cash holdings are growing rapidly and rea ched the peak value 25.7% in 2010, showing that the cash asset has become one imp ortant asset of company and should be paid attention to. Based on this, the thesis, startin g from principal-agent theory, discusses the relationship between ownership concentration, c ash holdings and company value.The empirical data of the private listed firms in Chinese manufacturing industry from 2009 to 2013 taken as the object of study, it is found through theoretical analysis, (1)logical reasoning and empirical test that there is obvious agency relationship between the substantial shareholder and the minority shareholder of the private listed firms in Chinese manufacturing industry, which shows the positive correlation between ownership concentration and cash holdings. When the shareholding is highly concentrated, the substantial shareholders have obvious "tunneling behavior" and their cash holdings increase. (2)The relationship between the cash holdings and the company value is reversed "U" type, which shows the low-profitability of the cash assets and the company asset occupation and transference of the substantial shareholder, affecting the company value. (3)Based on the above two empirical conclusion logical reasonings and the empirical analysis of sample data, the same conclusion is drawn that the relationship between the ownership concentration and the company value is also reversed "U" type and the principal-agent problem of Chinese manufacturing private listed firms is very prominent. When the shareholding is highly concentrated, the substantial shareholders use their absolute control of the company to encroach on the interest of minority shareholders and to damage and reduce the company value; when the shareholding is highly fragmented, "free-rider" among the shareholders will cause ineffective supervision of the management, make the management not take shareholder wealth maximization as the management goal and finally lead to the decline in the company value. (4)At the end of this thesis, on the basis of empirical study, modelling, mathematical reasoning and calculation, it is concluded that when the ownership concentration of the top ten shareholders of Chinese manufacturing private listed companies is within the range of 41.86% to 46.28%, the company value reaches the maximum value.