Ownership Structure, Related Transactions And Enterprise Value

The related transactions of the listed companies have a both two-side and complex effect onenterprise value. On the one hand, The related transactions could fully stimulate the vitalityof the corporate resources, turning the external market transactions into the internal ones,therefore reducing the transaction costs and enhancing the enterprise value. On the otherhand, The related transactions can be easily manipulated and used as a tool to transfercorporate profits and resources by the major shareholders who actually control themanagement of the enterprise, leading to the decrease of the overall value of the listedcompanies. The related transaction of listed company in our nation has large scale andpresents on a progressively increasing trend, which is closely related to the ownershipstructure of listed company in our nation. Many listed companies in our nation are generatedfrom the state-owned enterprise reform. In such special context, the phenomenon theownerships’ extreme concentration and even “one share being overwhelming big” appears,big shareholder’s aim of self-interest always make the related transaction become the tool forthem to seize small shareholders’ interest. The implement of reforming the shareholderstructure realizes the circulation of full shares and gives the new characteristics of ownershipstructure. Therefore, in current stage, it has some realistic significance to research theinfluence of related transaction on enterprise value from the perspective of ownershipstructure.On the basis of analyzing the relationship between shareholding structure and corporationvalue, this paper deeply discusses the connection among shareholding structure, relatedtransaction and corporation value, and the conclusion is made as bellow:（1）Shareholdingstructure affects the abnormal related transaction of listed company, while the shareholdingproportion of first shareholders is positively connected with abnormal related transaction, thecumulative shareholding proportion of first5float shareholders is positively connected withabnormal related transaction, meanwhile, the higher FOURF(stands for the proportionbetween proportion sum of second and fifth shareholders and the proportion of firsshareholder) is, more negatively is connected with abnormal related transaction.（2）Abnormal related transaction(aiming to make profit, non fair feature) will damagecompany’s value while normal related transaction will not.（3）There is existing relationshipamong shareholding structure, related transaction and corporation value, which is that thehigher shareholding proportion of firs shareholder has, abnormal related transaction is more negatively connected with corporation value; the higher cumulative shareholding proportionof first5float shareholders have, abnormal related transaction is more negatively connectedwith corporation value, meanwhile, the higher FOURF is, weaker influence abnormal relatedtransaction will bring to corporation value.At last, suggestions are given on the basis ofconclusions:（1） Standardizing the related transaction （2）Optimizing the shareholderstructure（3）Strengthening the supervision to big shareholders, and further standardizingtheir decisions.（4）Effectively restricting the share ownership by absorbing strategicalinvestors, thus improving equity balance degree.