The Effect Of A Company's Ownership Characterisics On The Relationship Between Operational Complexity And Resource Allocative Efficency

In recent years,China's economy has maintained rapid development and the consumption power of residents has continued to increase.In order to expand market share and maintain rapid growth in their own performance,companies have adopted a series of measures,such as external mergers and acquisitions.On the one hand,the above measures have expanded the company's scale and enhanced the company's own strength;on the other hand,it also brings a series of problems such as the increase in the complexity of the company's operations.Does the continuous expansion of the company's business bring the expected growth in the company? From the reality,it seems difficult to give a definite answer.Part of the reason is that the increase in the company's operational complexity often further increase the information asymmetry between the company's principal and the agent,giving the company management more room for personal interest manipulation,which in turn will make the agency problem increasingly prominent.At the same time,One share dominates exclusively phenomenon is more common in Chinese companies.Relevant research believes that the equity characteristics of equity concentration tends to help reduce agency problems and improve company operating efficiency.Others believe that excessive concentration of equity will make the background of shareholders too single,which is not conducive to coping with the challenges of complex business environment.So whether the dominance of a share can help to solve the problems under the complexity of the company's operation,and whether it can be an effective practice and institutional choice for Chinese companies to deal with the complexity of operation? In addition,among the largest companies,there is large number of companies controlled by large state-owned shareholders.As we all know,state-owned property rights often have problems such as the absence of regulators.Does this significantly affect the possible concentration of equity in the company? The above situation has become a common concern.It is the main attempt of this paper to study the following issues:(1)What is the relationship between operational complexity and the efficiency of company resource allocation.(2)How the concentration of equity affects the relationship between business complexity and the efficiency of company resource allocation.(3)How the centralized governance structure of ownership under different property rights affect the complexity of the business environment and the efficiency of resource allocation.Theoretical analysis believes that when the company's operational complexity increases,the difficulty of forecasting and supervising management behaviors by regulators,external shareholders,and public media will also follow,thus deepening the company's agency problems.At the same time,the improvement of business complexity has also placed higher demands on the company's management.Whether the company can cope with the challenges in a complex environment remains still a problem.Due to the above-mentioned drawbacks shareholders are cautious about increasing the uncertainty of business operations.We believe that when a company has a dominant share,the loss caused by operational risk is more serious to the major shareholders.Therefore,the majority shareholders will use their power to choose a more stable mode of operation in order to avoid the loss caused by high operational complexity.At the same time,the high concentration of equity will also help enterprises reduce the internal friction caused by the struggle for control rights,which is conducive to raising high efficiency of resource allocation.Therefore,we conclude that in the case of low operational complexity,the effect of equity concentration is the most significant.Because large shareholders are unwilling to bear the risks of high operational complexity,a company with high operational complexity usually adopts a diversified equity governance structure,which effectively diversifies risks.At the same time,the diversified shareholders with composite background are more conducive to guiding the development of the company under high operational complexity.At this time,it may not be the best choice to adopt the governance structure of the equity concentration.In addition,the problems of state-owned companies due to the absence of regulators and the occurrence of internal control rights are more likely to be consumed.Therefore,we believe that the effect of centralized equity management will play a greater role in private enterprises.In view of the above theoretical analysis,three hypotheses are proposed and further empirical tests are carried out.This paper selects the listed companies in China's Shanghai and Shenzhen stock markets in 2012-2016 as the research object,and empirically tests the impact of the arrangement of the equity concentration system on the efficiency of the company's resource allocation under the complexity of the operating environment.The empirical test results show that the improvement of the complexity of the business environment will have a negative impact on the efficiency of the company's resource allocation.However,as the operating environment is less and less uncertain,the highly concentrated equity is more conducive to the efficiency of the company's resource allocation.Further research results show that in the case of low operating complexity,the highly concentrated equity promotion of the company's resource allocation efficiency occurs in non-state-owned holding companies.This means that non-state-owned holding companies tend to have a highly concentrated equity structure when the operating environment is less uncertain,suggesting that privately controlled equity will choose a highly concentrated equity structure to reduce the agency cost in the case of low information asymmetry.This also means that a highly concentrated equity structure is an institutional choice to deal with excessive agency costs in the case of low information asymmetry.The main contribution of this paper is to expand and enrich the research of related theories.It is found that the concentration of equity under low operating complexity is more conducive to play a governance role,while the effect of centralized equity management is limited under high operating complexity.At the same time,it is proposed that the concentration of equity has a significant effect on avoiding risks and reducing the consumption of internal control rights.Through further research,we also found that compared with the state-controlled shareholding,privately controlled equity in the case of low information asymmetry,the selection of a highly concentrated equity structure is more conducive to the efficiency of the company's resource allocation.At the same time,the research of this paper is based on the characteristics of China's emerging capital market,and it has great reference significance for China,especially emerging market countries with the same characteristics.At the end of the paper,relevant policy recommendations are further proposed.First,the company should be cautious in its face of expansion behavior to prevent the business complexity caused by excessive expansion,which in turn leads to a decline in the efficiency of the company's resource allocation.Secondly,the listed company should choose the company with its own equity structure and low operating environment complexity according to its own business characteristics.The choice of the equity concentration structure is more conducive to the improvement of its own resource allocation efficiency.Finally,the company should rationally treat the choice of shareholding structure under different business complexities according to the nature of its own property rights,strive to foster strengths and avoid weaknesses,and give full play to the greatest advantages under the nature of its own property rights.