The Split Share Structure Reform, Shareholder Agency Relationship With The Corporate Governance Performance

A major characteristic of our country's capital market was the dual-class equity structure before 2005. Because of the establishment of this system, it separated the benefit between circulating shares and non-circulating shares. Many decisions of the company were made from the benefit of controlling shareholder (non-circulating shares). At certain extent corporate governance performance appraised by the capital market was distorted. Meanwhile as a result of the concentration of the ownership, it also formed the agent relation between shareholders which meant the small shareholder entrusted controlling shareholder to exercise the corporate operating right. But after May of the year 2005, our capital market was carried out the reform of the dual-class equity structure. After the reform, benefit of all shareholders will tend to be consistent and it'll bring out some new influence to the agent relation between shareholders and corporate governance performance. So the paper took the public companies listed on small and media enterprise board as sample to conduct the empirical study, which finished the reform at first.The paper took some correlation data of public companies listed on small and media enterprise board from 2004 to 2006 as study objects. It used the method of linear regression to analyze the relation between equity structure and corporate governance performance. The results demonstrated that it had no remarkable linear relation between the proportion of equity the biggest shareholders owned and corporate governance performance of public companies listed on small and media enterprise board. While the proportion of equity the institutional investors owned had the remarkable positive influence to corporate performance. It illuminated that developing and increasing institutional investors had positive significance to improve the corporate governance performance. At the same time the proportion of the independent director had some remarkable positive influence to corporate governance performance. The scale of the board of directors had some remarkable negative influence to corporate governance performance. Through the comparative analysis of three years' data, we knew that the reform of the dual-class equity structure enhanced the correlation between equity structure and corporate governance performance. It had positive significance to consummate corporate governance further. From the aspect of the agent-principal theory, increasing the degree of ownership restriction and forming the relatively concentrative equity structure could improve the agent relation between shareholders to reduce the principal cost.