The Impact Of Ownership Structure On Asset Injection To Listed Firms

With the completion of non-tradable share reform, split share structure problem in China capital market was solved to a large extent. China stock market entered the time of fully traded. After that, the capital market set off a wave of asset injection to listed firm from major shareholders. Some of the injections were the promises of major shareholder during the reform, some were the active behaviors of major shareholders. Asset injection also became an investment concept in the secondary market. Although the completion of non-tradable share reform, to some extent, eliminated contradictions between the tradable shareholders and the non-tradable shareholders, comparing to developed market in the US and Europe, China listed firms are with higher ownership concentration. Due to the dominance of major shareholder, the agency problems between major shareholders and minority shareholder is still the core issue of shareholder behavior in capital market. In essence, asset injection from major shareholders to listed firms is a large scale related-party transaction in the internal market. Benefits distribution among major shareholders and minority shareholders and the rebalance of power are the fundamental problems that affect shareholders’ behavior. Therefore, this paper considers it necessary to study the shareholder behavior from the perspective of ownership structure.With an empirical study, we conclude that the incentive of major shareholder to carry out the asset injection is positively correlated with the percentage of major shareholders’ holding position in the listed firms. Sales of shares from other large shareholders rather than the major shareholder could enhance the incentive of the asset injection from the major shareholders. The enhance effect is greater for the major shareholders with a relatively small position in the listed firms than for the major shareholders with a large position in the listed firms. In this paper, from the point of view of agency costs and wealth effects, the explanations are given.