Empirical Research On How The Degree Of Control Of The Insiders Impacts The Performance Of Listed Companies

With gradual expansion of the insiders’ control of the corporate executives,insiders’ control of executives is becoming a problem which can not be ignored.Although the general theory thinks that there are many negative effects of insiders’control, but if the degree of insiders’ control is proper for the enterprise, it can alsomake contribution to make effective decision, improve operating achievement and cutdown transaction costs. In this paper, we study how three measure indexes whichreflects the degree of insiders’ control affect performance of all the companies in thestock market through empirical research, so that we can find out the balance pointbetween the degree of internal control and the quality of the operating performance ofthe enterprises,and we can provide much practical proposals to the relevantdepartments.In the first place, this paper defines the concept of the degree of insiders’ controland the business results of the corporation and put forward the measure indexes whichreflects the degree of the insiders’ control including the ratio of internal executives’stock-holding, the total number of executives’ compensation, the number of the internaloperators serving on the board, and earnings per share stands for the operatingperformance. Then the paper explains the insiders’control from agency theory and thetheory of insiders’ control theoretically, and analyze how the three measure indicatorswhich reflect the degree of insiders’ control how affect business results of all theenterprises in the stock market; Finally, we put forward some suggestions on how tooptimize corporations’ performance on the basis of the results of the study.During the empirical research, the paper chose the A-shares listed enterprizes fromShanghai and Shenzhen securities transactions place which exist the issue of insiders’control from2010-2012as the study sample. Then I use earnings per share whichrepresents the business results of companies as the independent variables. Meanwhile, Iuse the share of the stock of the executives, the total payroll of the top three managersand the number of executives who take a place on the board of directors as dependentvariables to measure the level of insiders’ control. Afterwards, I study how that threeindependent variables affect the business results of listed companies by setting up themultiple regression model. By the study: insiders’ control is not a adverse problem onthe operating performance of all the enterprises in the stock market, the proportion ofthe stock of the operators, the total cash payroll of the top three managers of all listedcorporations of the market are quite related to the operating achievement, while therising amount of managers who have additional position on the board causes a adverseinfluence on business achievement of corporation. Ultimately, by empirical research on how to make conclusions on insiders’ control and managerial of all listed corporations,we can make quite a lor of applicable recommendations for government.