The Research On Chinese Listed Companies’ Ownership Structures Influencing Equity Agency Costs

Agency problem is a very important problem in the listed companies. Agencyproblem results from the separation of corporate ownership rights and managementrights in the principal-agent relationship and it results in agency costs. Agency costscause the waste of enterprise resources, damage the interests of corporate stakeholders.To alleviate agency conflicts and to reduce agency costs is the focus of many scholars’discussion. Now a new trend presents in Chinese stock market. That is the ownershipstructure of the listed companies has been changing. More and more managementshareholders, institutional investors and foreign shareholders enter in the stock market,the control of single large state-owned shares is been broken. The paper focuses onthe influence of the current ownership structures to listed companies’ equity agencycosts which are between the shareholders and the management under the context.Based on the analysis of the existing situation of listed companies’ equitystructures, the paper selects ownership concentration, equity balance degree and theshareholders’ natures to measure ownership structures referring to the research ofmany scholars. And the shareholders’ natures include management shareholders,institutional investors and foreign shareholders. Management fee ratio (MFR) andasset turnover ratio (TAT) are selected to measure the equity agency costs respectively.The paper will analyze the empirical results of the both aspects synthetically. Thepaper empirically tests the relationship between the current ownership structures withequity agency costs with multiple linear regression model. The results show thatequity concentration, management shareholders and institutional investors influencethe listed company equity agency costs in inhibitory effects. It shows that appropriateequity concentration, developing institutional investors and giving managementequity incentive measures are significant. These measures can be conducive to buildgood equity structures, restrain opportunism behaviors of the management. In addition,maintaining a good financial structure in listed companies can reduce equity agencycosts. Thus, the governance of listed companies can be improved and the efficiency ofChina’s securities market can also rise.