An Empirical Research On The Relationtship Bewteen Ownership Structure And Corporate Perfomance Based On Equity Division Reform

Ownership structure is the fundamental problem on the corporate governance study. The relationshipbetween ownership structure and corporate performance is a hot topic on corporate finance. The listedcompany′s ownership structure determines the internal allocation of rights among the shareholders,so as toimpact the efficiency of corporate governance, and finally will affect the corporate performance. Equitydivision reform which initiated in2005is a milestone event of China's securities market. It makes changesof the listed company′s ownership structure,and provides a good opportunity to study the relationshipbetween ownership structure and corporate performance.In this paper, we select593listed companies in Shanghai and Shenzhen from2003to2010as aresearch sample, and the balance penal data includes4744effective observation. We use return of asset,return of equity and Tobin′s Q to measure the corporate performance. We divide ownership structure intothree aspects to study the relationship between ownership structure and corporate performance, usingproportion of the largest shareholder to measure equity concentration,Z index to measure equityrestriction,proportion of the tradable shares to measure equity circulation. In the course of studying,establishing single equation model and simultaneous equation multi-regression model, we divide theresearch sample into four groups, according to weather it before or after the equity division reform andweather the actual controller is state. The article makes an empirical study to test the hypothesis bymethods of ordinary least square and two-stage least square.Through proceeding study,conclusions of this thesis are as follows:Firstly, from an exogenous perspective of ownership structure,equity concentration shows positivepromoting effect on corporate performance, but it is not significant after2006. The equity restriction haspositive promoting effect on corporate performance, but in non-state-owned companies the effect is notsignificant before2006. The equity circulation has negative promoting effect on corporate performance, butit is not significant after2006.Secondly, owning to the endogenous properties of ownership structure, it's an interactive double-way relationship between ownership structure and corporate performance. The equity concentration shows moresignificant and more effective positive promoting effect throughout. In the meantime, corporateperformance exhibits a significant positive feedback effect on equity concentration. But there is asignificant negative interactive effect between them, when use Tobin′s Q as dependent variable to do thestability test. The equity restriction shows more significant and more effective positive promoting effectthroughout. At the same time, corporate performance exhibits a significant positive feedback effect onequity restriction. The equity circulation doesn't through the Hausman-test, and there is not endogenousrelationship between it and corporate performance.Thirdly, on the one hand, there is not a significant non-liner relationship between proportion of largestshareholder and corporate performance from an exogenous perspective of ownership structure. On the otherhand, considering the endogeneity problem, we find there is an N-shape non-liner relationship betweenthem which is significant after the equity division reform, and the inflection points of non-monotonicrelationship are a slight difference in different groups.