Shareholding Structure And Corporate Governance

Ownership structure plays a fundamental role in terms of corporate governance and it is an important factor which determines the whole system of corporate governance arrangements. Ownership Structure refers to the distribution and match conditions between the right of corporate control and the right of residual value, including the degree of ownership centralization and shareholder identity etc, which are composing factors of ownership structure. The behaviors of corporate governance are affected by the ownership structure, which influences on corporate performance and market value.Among many influence factors to the corporate governance of enterprises, the specific characteristics of ownership structure are the fundamental forces which determine the efficiency of corporate governance. Ownership concentration ratios directly influence the stakeholder's relationship between shareholders, managers, creditors and other stakeholders in the corporate governance structure.In the companies with dramatically dispersed stock right structure, the individual shareholders hold real small shares of the corporations, and they do not have any power and motivation to supervise the manager's acts and behaviors. Free-riding has become common phenomena and that results in high agent cost. On the contrary, in the companies with highly concentrated stock right in single stake, larger shareholders not only take true power of the companies but also plunder benefits of minority stockholders and other creditors, which give rise to the principal contradiction in corporate governance. Different types of shareholders, also lead to different acts of corporate governance. For instance, the great different behaviors between state-owned shareholders and private shareholders are mostly typical. Due to special historical problem, the listed companies in China form somewhat misshapen ownership structure, which could be boiled down a series of phenomena like a single shareholder owing major shares of a firm, state owing almost all listed companies, lack of competition among shareholders, market absence of corporate control power. The aftermath is insider control and major shareholders' grabbing corporate resources.Based on the theoretical analysis of the relationship between ownership structure and corporate governance, and according to the empirical research of the ownership structure of listed companies in China, this paper reveals the functional mode of ownership structure of our country to the corporate governance mechanism. And it also points out that misshapen ownership structure with non-tradable state owned shares as the first majority shareholders is one of significant reasons that lead to non-efficiency of listed companies' corporate governance in China. Received the following revelation: under the present conditions, concentration the listed company's shares in China to some extent of private enterprises, collective enterprises and other corporate shareholders, would come to be a more effective corporate governance structure, which will be able to improve the performance of the company positively. To improve the corporate governance of listed companies in China, it should reduce appropriate state-owned shares, and make great efforts to cultivate institutional investors, and set up a wide range source of investment.