Ownership Structure And Enterprise Risk

The integrated of the global economy promotes the development of world economy and also intensifies the competition between enterprises, in the complex marketing environment, companies face the risk of bankruptcy or being acquired at any time, especially with the deep understanding of global financial crisis, enterprise risk management issues are paid more attention by enterprises, investors, regulators, rating agencies and other relevant stakeholders. In the numerous factors influencing the enterprise risk, the neglect of the risk or excessive risk investment in the pursuit of excess profit is undoubtedly the internal factor which increases the enterprise risk, and the failure of corporate governance mechanism is the root cause of these behaviors. Hence, what is the influence of the relationship between ownership structure and enterprise risk?The existing literature have studied the problem of enterprise risk in depth from the aspect of enterprise strategies, the investor protection mechanism and the local cultural feature. After the 2008 financial crisis, the study of enterprise risk from the initial discussion in the technical level gradually transferred to the corporate governance level, the compensation incentive, control market and board independence etc, are all involved, foreign scholars have studied the risk problem from financial enterprises to the non-financial enterprises, but further study of the relationship between ownership structure and non-financial corporate risk in China is relatively less.Chinese economy is in transition period, China’s ownership structure has experienced two stages before and after reform of the shareholders structure, it is very necessary to research the relationship between ownership structure and corporate risk in the new economic situation. Research on ownership structure configuration from the perspective of corporate governance will be able to directly provide some valuable references for institutional investors, regulators, bank credit department, which also has a certain practical significance for the enterprise to allocate ownership structure rationally.In this paper, by studying the relationship between the equity structure of Chinese non-financial listed companies and the enterprise risk, we find that ownership concentration and enterprise risk are nonlinear u-shaped correlated, and ownership restriction and enterprise risk have the same relationship, the company is in the lowest risk when the proportion of the first big shareholder at 34.69%. Compared to the competitive strong industry, the risk will increase when the biggest shareholder continue to add the proportion of shareholding in the competitive weaker industry and the risk of non-state-owned enterprises is more sensitive to the increase proportion of the first big shareholder. The risk of non-state-owned listed corporation is significantly higher than that of state-owned listed corporation, the main reasons are that the state-owned enterprises have more resources advantages and managers have smaller risk tendency because of political reasons. In addition, in China there is no significant relationship between executives shareholding and enterprise risk, which is mainly related to imperfect equity incentive system in our country and the lower ratio of executives shareholding.Through the analysis and discussion of the result, this paper puts forward three suggestions: first of all, control the proportion of the first big shareholder and encourage the other big shareholders to supervise the biggest shareholder, to enhance the strength of ownership restriction of our country; second, increase the proportion of executives and increase the equity incentive effect, to make the executives and shareholders have the same interests; third, continue to push forward the transformation pace of state-owned enterprise to a modern company, to build a fair competitive market system.