The Relationship Of Affiliated Management And Firm Value

Affiliated management is one of the tools,which large shareholder can use to enhance their control over their investments and is therefore widespread at the China stock market.In developed countries,where related laws are relatively strict,the controlling shareholder helps to solve the "Free Riding" phenomenon of minority shareholders.Affiliated management can increase the supervision of the controlling shareholder of each company and reduce the principal-agent issues between management and shareholders.This is helping to enhance the value of the enterprise.However,for developing countries,the role and influence of affiliated management is likely to be very different from that of already developed countries.As the progress of enterprises systems and the measures of legal protection are still imperfect in developing countries,the power of the controlling shareholder become too strong.This effects and increases the motivation of the controlling shareholder to encourage the minority shareholders,which will affect the enterprise value negatively.So far,domestic and foreign scholars did limited research on affiliated management of developing countries,and could not archive a conclusion about the economic consequences of affiliated management.The Peoples Republic of China is a typical country of economic transformation.The majority of the listed companies have their roots from restructured state-owned enterprises.This leads to the phenomenon,that the share structure is highly concentrated within the listed companies and causes the problem of the controlling shareholder’s encroachment on the interests of enterprise in various forms.On the one hand,the punishment and costs of violating for a controlling shareholder is too low.On the other hand relevant laws and regulations did not specify specific punitive measures to harm the controlling shareholder effectively.Instead of being disregarded,affiliated management has the potential of being intensified and multifarious.Also it needs to take into consideration that the practice of our company’s system started late,the structure of corporate governance is yet not perfect,and the appointment process of the senior managers,the board system and other aspects are inadequate.This is also a major reason which speaks for affiliated management.Ownership structure is an important part of corporate governance,which can have a significant impact on the behavior of controlling shareholder and the value of the enterprise.Therefore will this article focus on the perspective of ownership structure and describe the impact of affiliated management on corporate value.In sum this work will provide a theoretical basis to improve the structure of corporate governance.Based on the combination of theoretical analysis and empirical research,this article analyzes the impact of affiliated management on corporate value.And test the moderate effect of ownership structure on the relationship of affiliated management and corporate value respectively.Firstly,this article reflected the literature of affiliated management,and expounds the institutional background,related to the policies of China’s non-tradable share reform.Secondly,this paper selected A-share listed companies as samples for the period through 2011 to 2015.With that sample the work establish a model and analysis for the relationship between affiliated management,ownership structure and enterprise value,by using multiple regression.According to the research,we consider that: Affiliated management and the value of the company are negatively related.And both ownership concentration and stock proportion restriction are pure in regulating variable while ownership property is not adjustment variable.This study will help scholars to better understand the phenomenon of affiliated management,enrich the research on this issue,and provide a basis to improve corporate governance,supervision laws and regulations in China.