Study Of Relationship Between Ownership Balance And Financial Performance Of Small And Medium-sized Enterprises Board Listed Private Companies

There are lots of theories and empirical results which suggested that the improvement of ownership balance have a positive effect on increasing the performance and value of the listed companies. By increasing the ownership balance, the companies can reach the balanced corporate governance structures, and the largest shareholder's behavior can be effectively supervised. Therefore, the small shareholder's interest can be protected, and the performance and value of a corporation will be improved.From this point of view, this paper applies one mathematical model and a deep analysis of game theory with two outer large shareholders to illustrate the relationship between ownership balance and firm value. However, some theories argue that the increase of ownership balance can have opposite effect on the company's performance, because high degree of ownership balance may results in the battle between large shareholders for the control right and possible colluding for private benefit which will impose negative effects on firm performance. In Empirical studies, we use ROE, ROA, ROIC, TobinQ as dependent variables, ownership balance and its quadratic term as in dependent variables. The Result shows that, there is an inverse-U-shape relationship between the ownership balance degree and performance, so we find empirical evidence on the theory which state the increase of ownership balance can have opposite effect on the company's performance. Furthermore, we find that when the number of the large shareholders larger than two, the value of the companies cannot be improved by increasing the number of large shareholders.