Empirical Study Of Listed Companies Ownership Concentration And The Relationship Between Ceo Tenure

Corporate governance mechanisms were invented to solve the principal-agent problem between the shareholders and insiders. People have developed all kinds of mechanisms to reduce the agency costs. Block-holder is a common one, which is often used in developing countries with weaker legal systems. It is useful for eliminating the free-rider problem, giving the shareholders incentive to supervise their managers. However, block-holders without effective supervision will jeopardize the corporate value and the greater supervision from block-holders may aggravate the incentive of CEOs. Would a higher ownership concentration shorten the CEO tenure in listed companies?The empirical research confirmed a positive relationship between the CEO tenure and corporate performance because of a close relation between tenure and human capital accumulation. The longer a CEO stays in one firm, the better the human capital accumulation would be, especially the specific human capital accumulation which is very important for the firm's development.After considering the difficulties of using the tenure data, we studied the relation between ownership concentration and CEO leaving rate with a Logistic Model. The result showed that there was a strong positive relationship between the two variables. The higher concentration of ownership may cause a higher leaving rate of CEOs in the past three years. Private firms achieved better performance than state-owned ones while facing block-holder ownership, but their CEOs are more likely to leave than state-owned ones because block-holders in private firms are more likely to infringe upon their control rights.