Mixed-ownership Reform And Company's Business Performance

The mixed-ownership reform is of great significance to state-owned enterprises reform,but its significance to private enterprises rarely got studied.In recent years,the development of private enterpriseshas also encountered a series of problemsunder the background of downward pressure of China's economy.This paper attempts to study mixed-ownership reformfrom the perspective of private enterprises,instead of private capital going into state-owned enterprisesparticipating in the reform of state-owned enterprises,the case in this paper is state-owned capital goinginto private enterprises,which isanother direction of mixed-ownership reform,and the paper studiesprivate enterprises' business performance after introducing state-owned shareholders.In the Case of the paper,Dongjiang Environmental Company Limited(DECL)introducedGuangdong Rising Assets Management Co.,Ltd(GRAM),the state-owned shareholder,through the transfer of equity by company'slargest natural person shareholder.And the shareholding structure that state-owned shareholder being company's actual controller was actually formedtill its re-election of the board.DECL introduced state-owned shareholders because it can solve the financial risks,the risk of business scale expansion,the risk of market competition and policy risks faced by the company at that time.For GRAM,holding DECL could jointly develop some businesses to help DECL develop wellas well as attain the goal of maintaining and increasing the value of state-owned capital.After DECL introducing state-owned shareholders,itwas found that the cumulative abnormal return obtained by the company through the event research method was very high in a short period,indicating that the company's behavior was recognized by the market positively and the short-term performance had improved.Through the analysis of financial indicators,it is found that the company's profitability,solvency and operational capacity have been improved,and gradually developed a leading edge compared with the industry.The reasons for the improvement of the company's business performance are listed below.The company expanded its market in other provinces with the help of GRAM,which led to the continuous increase of total income.At the same time,DECL optimized its strategy.Besides,DECL developed some new financing models,the company's credit rating has been improved,so the debt-raising capacity in financial institutions such as in capital markets and banks institutions increased,and the overall financing costs have decreased.After introducing state-owned shareholders,the company's innovation capabilities continue to improve,providing technical support for the development of core businesses.Through the case of mixed-ownership reform of DECL,it is concluded that there may be several experiences afterparticipating the mixed-ownership reformfor private enterprises.Afterintroducing state-owned shareholders,the former company may face “state-owned enterprises common problems”,the company's strength is weak to introduce state-owned capital,the target of state-owned shareholders and non-state-owned shareholders is inconsistent which causes the conflict.From the case of DECL,it can be learned from the following aspects to solve these problems.The company should improve the level of corporate governance,such as forming a shareholding structure between shareholders,setting rules to restrict the behaviors of state-owned shareholders,and adopting investor protection measures,enhancethe company's strength and formcore competitiveness in the industry,the company can take the initiative to assume some social responsibilities and establish a good social image without damaging the interests of shareholders.This paper concludes that the DECL'sintroducing state-owned shareholdersis conducive to the improvement of business performance,and the acquisition of state capital can bring various advantages to the company.At the same time,this paper suggests that environmental protection enterprises can introduce state-owned shareholders to achieve better development,while they are reminded to pay attention to prevent the drawbacks might caused by "state-owned enterprises common problems" after introducing state-owned shareholders.