The Influence Of Managerial Ownership On Financial Risk Of Listed Companies In China

Management ownership has gradually become an important phenomenon in the listed companies in China.Most of the current academic researches on the managerial ownership focus on the relationship between managerial ownership and firm value,while only a small amount study the relationship between managerial ownership financial risk of listed companies.This paper argues that the dual effects of managerial ownership,which are convergence of interest effect and entrenchment effect,have the opposite effect on financial risk,and with the different management ownership ratio,the dominate effect is different,resulting in different financial risk of the listed companies.After reviewing the previous related literatures about managerial ownership,debt maturity structure and financial risk,this paper chooses financial risk(Z-score)?managerial ownership ratio(Mbo),the square of managerial ownership ratio(Mbo2),and financial leverage(asset-liability ratio:Lev),Growth(Tobin s Q),profitability(return on total assets:Roa)as variables and then selects a sample of 6244 of CSI A-shares listed non-financial companies from 2009 to 2015 with the Wind database.According to the theory of the convergence of interest effect and entrenchment effect of managerial ownership,the paper uses the method of descriptive statistics,panel regression and the classification study to analyze the heterogeneity and the critical point of the effect of managerial ownership on the financial risk of listed companies.The main innovations of this paper are as follows:First,the majority of the previous studies treat the managerial ownership as just one of the variables to influence the debt maturity structure and financial risk,while the paper treat the managerial ownership as the core explanatory variables,which gets a deeper understanding of the relationship between the three.Second,previous studies have not examined the relationship between managerial ownership,debt maturity structure and financial risk.Based on the theory of interest convergence effect and entrenchment effect theory,the paper analyzes the influence mechanism of managerial ownership on financial risk,which reveals the relationship between the three.Third,according to the theory of the convergence of interest effect and entrenchment effect of managerial ownership,the effect of different managerial ownership ratio on financial risk is different.Previous studies conclude that the relationship between managerial ownership and financial risk is linear based on the situation that managerial ownership ratio in our country was relatively low at the past year.In recent years,that managerial ownership ratio in our country is changing which result in a complex conclusion of the relationship between managerial ownership and financial risk.From the empirical point of view,some foreign literatures find nonlinear relationship between managerial ownership and financial risk,while in domestic literatures the conclusion of the relationship are still linear.The paper uses the classification study and find the relationship is nonlinear in China,which is quietly different from the previous domestic literatures.Last but not least,this paper studies the relationship between the management ownership and the financial risk of listed companies in two aspects.One is that the paper compares the difference between the company which managerial ownership ratio is zero and the company which managerial ownership ratio is above zero,and the other is that the paper reveals to analyze the heterogeneity and the critical point of the effect of managerial ownership on the financial risk of listed companies by the classification study,which are not revealed by the previous literatures.Through theoretical analysis and empirical research,the conclusions are as follows.First,the relationship between managerial ownership and financial risk is U-type because of the dual effects of managerial ownership which are the convergence of interest effect and entrenchment effect of managerial ownership.Second,the proportion of managerial ownership should be at least 0.005%so that it can affect the financial risk.Third,in listed companies of which the proportion of managerial ownership is above zero,debt maturity structure has a positive effect on financial risk.Fourth,in listed companies of which the proportion of managerial ownership is zero,the effect of debt maturity structure on the financial risk is not significant.Last but not least,the proportion of managerial ownership affects the financial risk through the impact of debt maturity structure.