Research On Chinese Security Company's Ownership Structure And Governance Efficiency

Security company is the major participant in the capital market, and it is the important agency for enterprise listing,financing and collocating financial recourses, and it is important flat to keep away from the finance risk and to weaken bank system risk. Based on the course of security industry developing, we can find that a set of security companies with solid capital and extensive distribution occure in the recent 20 years, but how to construct the governance structure of security company has not been put into effect, and so it leads to much canonical phenomenon in the course of running, such as the operation mechanism is not perfect and internal management mechanism is not sound and operation is not canonical. Many Chinese specialists and scholars and managers of this industry has augured those existing problems of security company, mainstream viewpoint is that too much concentrated ownership structure of security company and the state-owned share of the largest shareholder is the major reason that leads to the governance crisis of domestic security companies, and so they put forward the new thought to dispersed ownership and introduce into the private ownership. But after the two years effect , it can be seen that the effect is not satisfying and it leads to diverse ownership structure and inefficient governance of private ownership security company.To the question, this paper discusses the influencing mechanism that how the ownership structure of our country's security company influence the governance of security company. And this paper studies in theory the influence that ownership structure to company governance in the different ownership concentrative degree and the different ownership property, and it father proves the relation by empirical researches. This paper consists of five parts, and the major contents and conclusions as following: Chapter one, introduction. This chapter introduces the research background and purpose, and then the domestic and foreign research actuality, and the research points and innovation and clue. And then study method and the structure arrangement are discussed.Chapter two, the characteristic of security company's ownership structure in our country and the international comparison. This chapter analyses the ownership structure and governance status of security company in our country and major foreign countries. By comparing particularly the governance structure of security company in our country to that in U.S.A from ownership structure and director broad structure and incentive mechanism, and then it can be found that some characteristic on the governance structure of our country'security company:"the concentrated ownership structure","ownership property is the typical state owned enterprise characteristic","the worse fluidity of ownership","the major controlling shareholder becoming nominal","the lower proportion of independent director and the worse independence","immature incentive mechanism"and etc. By analyzing the state, it is can be concluded that the problem of our country's security company is the concentrated ownership structure integrating combined with the shareholders'state owned characteristic, and it is that the state owned controlling shares monopolize in the security company's ownership structure. In the condition that our country's capital market is not developed and the law is not mature and the external monitoring mechanism is not sound, the share concentrating to private ownership resolves the problem of nominal state owned share, but it can resolve the difficult problem on the governance of security company.Chapter three, the effect mechanism of ownership structure to governance of security company. This chapter in theory discusses how two kinds of ownership structure influence the performance and governance efficiency of security company by the internal governance mechanism and external governance mechanism. Firstly, this chapter discusses the influence of ownership property to performance and governance efficiency of security company. Secondly it discusses the influence of ownership proportion to performance and governance efficiency of security company. According to the proposition concluded from theory model and combining with the influence of share of the largest shareholder to agency problem and the protection of investor's benefits, this chapter puts forwards the follow research hypothesis: As the holding proportion of the largest shareholders increasing, the performance of security company firstly declines and then raises, and like the shape of"U". In addition the difference of ownership property of the largest shareholder will lead to the difference of agency relationship and then will lead to the difference of company governance to protection of investor's benefits, and in the end it will lead to the different influence to the company value. So this chapter puts forwards the follow research hypothesis: When the other condition is the same, the performance of security company whose largest shareholder is state owned share is worse, and the performance of security company whose largest shareholder is state legal person share is better.Chapter four, the ownership structure and performance and governance efficiency of the security company in our country. This chapter analyses the influence of ownership proportion and the ownership property of the largest shareholder to the governance efficiency in our county's security company in empirical method. According to the empirical analyses of ownership structure and governance of security company, it can be found that the relatively concentrated ownership structure is some positively significant to increase company governance efficiency. As the holding proportion of the largest shareholders increasing, the performance of security company firstly declines and then raises, and like the shape of"U". According to the empirical data, the relation between the largest shareholder and company performance is the positively related, which is contrary to the popular view that"One Big Share Alone"is the major problem in security company. This paper think that though there is the probability that the large shareholder expropriates security company and the minority shareholders, but the effective monitoring effect from larger shareholder'should not be ignored, which seems to be very important when the market mechanism is very week. So in the recent company governance system structure, the function of the largest shareholder should be maintained, but not be completely neglected. According to the empirical result on the relation between the ownership property of the largest shareholder and company governance, there is some relationship between the governance state in security company and controlling share's property. When the private ownership is controlling share and because of strong pursuing profit of private ownership, the larger shareholder will be easy to expropriate the middle and minority shareholders'benefit and investors'benefit, which leads to the manipulation of the company's operation and results in company crisis. Comparably, the security is controlled by stated ownership is better governed. According to the analyses result ,that the largest shareholder is state-owned shares or state legal person shares is significant to improve governance of security company in the recent external system and market environment.Chapter five, optimization of ownership structure of security company and the construction of external environment. Based on the former analyses and considering the present condition, this chapter advances in short term to construct"One Big Share Alone and relatively concentrated"ownership structure. And at the same time we think that selecting state-owned shares or state legal person shares as the largest shareholder of the security company is better suited the need to optimize the present security company's governance structure. On the contrary, selecting the private ownership as the absolutely controlling share, there will be more moral risk in the course of running of the financial company. And overly dispersed ownership structure will lead to serious internal control and the hitchhiking phenomenon. But from long term, as the external environment of our country's capital market improving and construction of relative institution of security industry bettering, the long time's selection will be the relatively dispersed ownership structure and private ownership in the security company in collocating company's share. In the course of strengthening the internal governance structure of security company, it needs more to strengthen the construction of the relative environment institution about security company's legal person governance structure ; Strengthen the construction of independent director institution; Better incentive and restriction mechanism; Strengthen the limitation of law to this industry; Better information disclosure institution and fostering manager market and etc. This paper has the following major innovations:1,The choice of research contents. This paper studies the relation between the ownership structure of security company and the company's governance efficiency, which is less studied by domestic and foreign scholars, and which is only describing the phenomenon and discussing it in theory, and it is has not been tested by empirical research, and so the concluded result about how the ownership structure of security company influence the company performance and governance efficiency is not comprehensive.2,From this resreach, this paper puts forwards that high concentrated ownership structure and state-owned ownership controlling is better for improving security company's performance in the present condition that capital market is not developed and the law protecting investors'benefits is absent; On the contrary excessive dispersed ownership structure and the share controlled by private ownership will lead to the more serious internal control and the more expropriations from larger shareholder to the minority shareholder's benefits, and which will seriously weaken the function of company governance and reduce the company performance. From the results by empirical analyses, and it is contrary to the present research conclusions and intuitionistic understanding.3,From this research, combined with the external market environment, law environment, institution environment of security company and etc, and the mechanism for selecting agent for security company and internal governance state and etc, this paper thinks that the governance structure of security company should change as the internal and external environment changing in the different term. This paper puts forwards that the proportion of state-owned share can be properly enhanced and establish relatively concentrated ownership structure in the present condition that capital market is not developed and the law protecting investors'benefits is absent. After resolving the former problems, it can be considered by properly dispersing ownership structure and introducing into private ownership to improve the governance structure state of our country's security company and to make the governance structure function well and improve company performance.Of course, because of limited research books and papers and especially the limited data led by the non-transparency of this industry, this paper has some disadvantage in empirical research.