Ownership Structure, Product Market Competition And Firm Performance

The governance structure has a significant influence on the firm performance, and the ownership structure is an important component of the governance structure. In a sense, the ownership structure is the deep-seated problem of the governance structure. Product market competition is one of the best ways to solve the agent problem between owners and managers, and fierce competition can improve corporate governance efficiently. The dissertation will disclose the essential mutual relationship between product market competition and ownership structure at the Chinese transitional stage.Firstly, the paper reviews a great deal of literature about ownership structure and product market competition, then analyses the mutual relationship of the above two. Finally, we test the effect of product market competition and ownership structure by evidence from Chinese listed companies.Using SPSS statistical software, this paper made empirical research on the main board listed companies from year 2003 to 2010, adopting three ownership structure variables: ownership concentration, ownership balance, managerial ownership; one competition variable: main business profitability; two performance variables: return on total assets and Tobin's Q. We get the empirical results, then make some analysis and interpretation. The empirical results show that ownership concentration, managerial ownership has nonlinear relationship with Tobin's Q and ROA; the ownership balance is negatively correlated to Tobin's Q but positively correlated to ROA; the main business profitability is positively correlated to Tobin's Q and ROA. As to the mutual relationship, the mutual relationship of ownership concentration and main business profitability is negatively correlated to Tobin's Q; but has no relationship with ROA; the mutual relationship of the ownership balances and main business profitability is negatively correlated to both Tobin's Q and ROA; the mutual relationship of managerial ownership and main business profitability has no relationship with both Tobin's Q and ROA. Finally we simply describe the conclusions and illustrate the limitations and prospects.